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62 d Congress! 
2d Session J 


HOUSE OF REPRESENTATIVES 


/ Document 
l No. 833 


COOPERATION AND COST 
OF LIVING 


MESSAGE FROM THE 
PRESIDENT OF THE UNITED STATES 


TRANSMITTING 


REPORTS FROM AMERICAN CONSULAR 
OFFICERS IN THE GERMAN EMPIRE 
AND CERTAIN OTHER FOREIGN COUN¬ 
TRIES IN REGARD TO COOPERATION 
AND THE COST OF LIVING 













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June 14, 1912.—Referred to the Committee on Ways and Means 
and ordered to be printed 


WASHINGTON 

GOVERNMENT PRINTING OFFICE 
1912 




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HOUSE OF REPRESENTATIVES { 


COOPERATION AND COST 
OF LIVING ltl± 



MESSAGE FROM THE 
PRESIDENT OF THE UNITED STATES 


TRANSMITTING 


REPORTS FROM AMERICAN CONSULAR 
OFFICERS IN THE GERMAN EMPIRE 
AND CERTAIN OTHER FOREIGN COUN¬ 
TRIES IN REGARD TO COOPERATION 
AND THE COST OF LIVING 



June 14, 1912. — Referred to the Committee on Ways and Means 
and ordered to be printed 


WASHINGTON 

GOVERNMENT PRINTING OFFICE 
1912 








































































n np n 

JUW 21 191? 





LETTER OF TRANSMITTAL. 


To the Senate and House of Representatives: 

I herewith transmit a report by the Secretary of State submitting 
reports from American consular officers in the German Empire and 
certain other foreign countries in regard to cooperation and the cost 
of living. 

Wm. H. Taft. 

The White House, June 14, 1912 . 










































» 















































































































































LETTER OF SUBMITTAL. 


June 14, 1912. 

The President: 

I have the honor to submit reports received from consular officers 
in Germany and certain other foreign countries in regard to cooper¬ 
ation and the cost of living. These reports supplement reports 
already submitted by consular officers in the United Kingdom, 
France, Belgium, Denmark, and the Netherlands. The inquiries of 
the consular officers were made under instructions from the Depart¬ 
ment of State by your direction. 

An analysis of the reports of the consular officers on cooperative 
societies and similar associations in the German Empire is prefixed 
to that series. This analysis includes an abstract of the report of the 
consul general at Berlin, in which the cooperative movement as a 
whole is reviewed, and some conclusions drawn as to the effect of the 
cooperative societies on the cost of living. 

Respectfully submitted. 

P. C. Knox. 

5 



INCLOSURES. 


1. Letter of the Secretary of State. 

2. Analysis of reports of consular officers in the German Empire. 

3. List of consular officers reporting for the German Empire. 

Consul General A. M. Thackara, Berlin, Prussia. 

Consul General Frank D. Hill, Frankfort-on-Main, Prussia. 

Consul General T. St. John Gaffney, Dresden, Saxony. 

Consul General Frank Dillingham, Coburg, Saxe-Coburg-Gotha. 
Consul General Robert P. Skinner, Hamburg. 

Vice and Deputy Consul General A. Schlesinger, Munich, Bavaria. 
Consul Pendleton King, Aix la Chapelle, Prussia. 

Consul Geo. Eugene Eager, Barmen, Prussia. 

Consul Herman L. Spahr, Breslau, Prussia. 

Consul Hiram J. Dunlap, .Cologne, Prussia. 

Consul Ralph C. Busser, Erfurt, Prussia. 

Consul Robert J. Thompson, Hanover, Prussia. 

Consul Alfred W. Donegan, Magdeburg, Prussia. 

Consul William C. Teichmann, Stettin, Prussia. 

Consul R. B. Mosher, Plauen, Saxony. 

Consul Samuel H. Shank, Mannheim, Baden. 

Consul George N. Ifft, Nuremberg, Bavaria. 

Consul Wm. Thomas Fee, Bremen. 

Consul Talbot J. Albert, Brunswick, Brunswick 
Consul Edward Higgins, Stuttgart, Wurttemberg. 

Vice and Deputy Consul Ernest L. Ives, Magdeburg, Prussia. 

Vice and Deputy Consul William W. Brunswick, Chemnitz, Saxony. 
Vice and Deputy Consul Rudolph Fricke, Leipzig, Saxony. 

Vice and Deputy Consul Warren E. Schutt, Kehl, Baden. 

Vice and Deputy Consul Frederick Hoyermann, Bremen. 

Consular Agent E. A. Claaszen, Danzig, Prussia. 

Consular Agent Alexander Echardt, Konigsberg, Prussia. 

Consular Agent Wilhelm Polenberg, Swinemunde, Prussia. 

Consular agency, Sorau, Prussia. 

4. List of other consular officers reporting. 

Consul General Herman R. Dietrich, Guayaquil, Ecuador. 

Consul Frank C. Denison, Fernie, B. C., Canada. 

Consul James M. Shepherd, Hamilton, Ontario, Canada. 

Consul Charles M. Freeman, Sydney, Nova Scotia, Canada. 

Consul Dean B. Mason, Algiers, Algeria. 

Consul W. Maxwell Greene, Hamilton, Bermuda. 

Consul George E. Anderson, Hongkong, China. 

Consul James Oliver Laing, Malta, Maltese Islands. 

Consul William Dulaney Hunter, Nice, France. 

Consul Edward A. Creevey, St. Michael’s, Azores. 

Consul P. Emerson Taylor, Stavanger, Norway. 

6 



COOPERATION AND THE COST OF LIVING. 


ANALYSIS OF REPORTS OF CONSULAR OFFICERS ON COOPERA¬ 
TIVE SOCIETIES AND SIMILAR ASSOCIATIONS IN GERMANY. 

[Compiled by the Bureau of Trade Relations, Department of State.] 

I. Inception and Growth. 


A few scattering cooperative organizations were in operation in 
Germany as early as 1850, but the movement as connected with 
general distribution received its greatest impetus when between 1890 
and 1900 the workingmen of Germany converted it into an instru¬ 
mentality of the Social Democrats. Many of the largest societies 
have been founded since 1900. The following table states the periods 
of organization: 


Date of foundation. 

Number of 
societies. 

Member¬ 

ship. 

Up to 1867. 

613 

2,891 

4,311 

12,720 

7,606 

493,602 
993,801 
726,171 
1,765,583 
600,583 

From 1867 to 1889. 

From 1889 to 1895.. 

From 1895 to 1904. 

From 1904 to 1909. 



The 28,141 societies thus in existence had 4,579,740 members; 
they were located in 4,392 communities. Over one-half of the total 
were credit unions (16,641), mainly mutual loan organizations. 
Consumers’ cooperative societies for the distribution of general 
necessaries numbered 2,205, and had a membership of 1,328,779; 
industrial producers’ societies totaled only 288, with a membership 
of 24,400; and agricultural'societies for production were 3,584, with 
298,006 members. Of these latter societies, six-sevenths were dairies, 
while distilling, wine growing, and fruit raising were the objects of 
most of the others. Taking up the statistics by States, it appears 
that Prussia greatly predominates in number of societies, while 
Bavaria, Wurtemberg, and Saxony are important. 

The general distributive societies, or consumvereine, are organized 
into a Central League of Consumers’ Unions, founded in 1902 by a 
Labor-Social-Democrat split from the General Credit Association. 
At the convention held at Leipzig by the Central League in June, 1911, 
there were reported as being 1,109 adhering societies, with a member¬ 
ship of 1,171,763 and an annual overturn of $73,049,723. Of these 
locals, 675 held stock in the Wholesale Purchasing Association of 
Hamburg, an organization founded in 1893, and which in 1910 did a 
business of $21,104,376. This association owns and operates flour, 
sugar, match, soap, and tobacco factories, as well as transacting 
wholesale business. Its manufactured products were sold in 1910 to 
a value of $12,500,000. In addition to groceries, it also deals in 
paper, shoes, household articles, etc.; and through warehouses and 
branches in all parts of Germany it supplies 1,554 customer societies. 

7 













8 


COOPERATION AND COST OF LIVING. 


Credit unions and agricultural cooperative societies appear to have 
arisen more gradually and from earlier beginnings. The agricultural 
associations are now well organized throughout the Empire, especially 
in the east. 

Civil employees of all descriptions and grades have widely taken 
up cooperation, the societies of railway men being noteworthy. It 
is not unusual for the membership of any given society, when not 
composed of workingmen or civil employees, to be drawn from some 
other more or less clearly defined class of population. 

Several of the reports mention the fact of the increasing cost of 
living as contributory to the growth of cooperation. 

II. Organization and Operation. 

As has been stated, the members of the consumvereine or affiliated 
retail cooperative societies are for the most part Social Democrats; 
very many of the members are labor union or factory men, moreover, 
and sometimes membership is restricted to such classes. The employ¬ 
ees of a single factory are not infrequently associated for buying 
purposes, either with or without aid from their employers. The 
Krupp Steel Works maintain a store for the benefit of their employees, 
which refunds a dividend of from 8 per cent to 10 per cent annually; 
but this institution, which has 95 branches, is largely under the con¬ 
trol of the business. In several instances factories themselves 
operate stores upon an entirely noncooperative basis, deducting pay¬ 
ment from the workers’ wages, but supplying articles at cost prices. 
At Kehl there are 30 factory stores. 

The maximum number of shares to be held by a single member is 
in general lower than elsewhere.. The shares vary in value from 
$4.76 (20 marks) to $11.90 (50 marks) and higher, and are paid for 
by accruing profits if the entrant does not care to pay full value at 
once. Members are frequently liable beyond their invested capital 
for an equal amount of some other specified sum. 

In some of the States of Germany nonmembers are not permitted 
under the law to buy from cooperative societies, and in others the 
societies themselves maintain this rule. In many localities, how¬ 
ever, nonmembers are perfectly free to purchase from the societies. 
In Dresden such purchasers even receive a rebate, but the real profits 
of the societies are distributed to the members only. 

The management is elected by general assembly, and consists of 
large supervisory boards and small executive committees. The lat¬ 
ter are the actual managers, and receive small salaries ($618.80 to 
$952 per annum in one typical society), varying according to length 
of service. They are liable for failure to exercise due diligence. In 
societies composed of civil servants the work is done by members on 
their weekly half holidays. Storekeepers hired for routine work 
receive from $285.60 to $595 per annum. 

Shares usually bear a low rate of interest, such as 4 per cent, the 
payment of which is conditional merely. Stated portions of the 
profits are set aside in special funds, to allow for the depreciation of 
property and fixtures, for periods of stress, etc. The lives or prop¬ 
erty of the members are sometimes insured in this manner. The 
methods of creating these funds vary. In some societies one-fourth 
of the profits due to each member are withheld until $23.80 (100 


COOPERATION AND COST OF LIVING. 


9 


marks) has been accumulated; the aggregate of these sums consti¬ 
tutes the societies’ emergency funds. Members receive the same 
interest on such holdings as upon stock. 

Affiliated general societies are not under obligation to buy from 
the Wholesale Purchasing Association, but apparently do as a general 
rule purchase from the latter all articles in wnich it deals. The pro¬ 
portion of the stocks of the various societies which is acquired from 
the wholesale association ranges from 30 per cent to 70 per cent, 
being rather smaller than in England. Retail societies are entitled 
to hold one share, worth $119, of the wholesale association for every 
500 members. There exists an association of south German societies, 
but its work is advisory, actuarial, etc., rather than industrial. 

Cash trading is strictly enforced, in so far as mentioned. Delivery 
of purchases is unusual, except in the case of coal, wine, bread, etc. 
Many societies undertake manufacturing to some extent. Commis¬ 
sion arrangements with outside dealers and with professional men is 
very common. Savings departments are a frequent adjunct. Many 
societies conduct building departments. In Hamburg 612 dwelling 
apartments and 42 business houses are owned, and members by pay¬ 
ing stipulated amounts gain “a preferential right to the apartments 
owned by the association.” 

Agricultural societies are mainly concerned with the cooperative 
purchase of land, implements, and farm supplies, rather than either 
the distribution of farm products or the purchase of living necessities. 
The most important societies are those of the Raifeisen system, 
whose activities are exceedingly varied. The sale of agricultural 
produce is not undertaken extensively. 

The societies are said to be organized under a national law passed 
on May 1, 1889. In 1896 the private retailers succeeded in having a 
law passed in Prussia to prevent the consumvereine from selling to 
nonmembers. A Prussian law of 1900, purported to be aimed at 
department stores, provides a tax on establishments handling more 
than one line of articles; and this has operated to force many coop¬ 
erative societies to discontinue the sale of any goods except groceries. 
In 1906 a law of Prussia subjected cooperative societies to a tax upon 
their incomes, irrespective of whether they sell to members only or to 
nonmembers, also. There is at present pending a law to tax the divi¬ 
dends distributed by the societies, but this is being opposed on the 
ground that it confiscates not profits but savings. 

The antagonism of private dealers toward societies composed of 
government employees has been especially marked. The ground is 
taken that, although these civil servants are supported by the general 
public, they are undermining the means of livelihood for the great tax- 
paying middle classes. The governments in some of the German 
States have at least tacitly discouraged these societies. 

A tax of 8 per cent of the profits in the State of Hamburg has forced 
certain societies to assume the form of ordinary limited liability 
companies. In the State of Bavaria it is mentioned that agricultural 
societies, while freed from the income tax, are subject to all other 
State dues. 

III. General Results—Cost of Living, Etc. 

The dividends range in general from 5 per cent to 10 per cent. 
Some societies guarantee a minimum dividend, which is usually ex- 


10 


COOPERATION AND COST OF LIVING. 


ceeded in practice; for example, an Aix-la-Chapelle society, which 
guarantees 3 per cent dividends, last year issued 8 per cent. In so¬ 
cieties where the minimum guarantee is larger, however, it is strictly 
adhered to, all excess profits going to special and political funds. In 
Hamburg the only advantage which buyers who are members have 
over those who are nonmembers is a guaranteed 4 per cent dividend. 

The quality of the goods supplied by cooperative stores is only 
criticised in isolated instances, and on the other hand the claim that 
such goods are less apt to be adulterated or of inferior grade is fre¬ 
quently mentioned. The report from Hamburg states that the ques¬ 
tion of relative quality and price between private and cooperative 
concerns is an open one, the individual dealers claiming that quality 
for quality they can meet the prices of the cooperative societies. The 
report calls attention to the fact that these latter have had the aid 
of a powerful political body in their efforts to build up successful busi¬ 
ness. A number of consuls state that prices in cooperative stores are 
no cheaper than in the general market. In some notable instances, 
however, such as Frankfort and Erfurt, the prices charged by the 
societies are said to be very substantially lower than those of private 
dealers, and the latter are forced to decrease their prices and profits. 

To meet the competition of cooperative societies two fairly success¬ 
ful means have been employed by the private merchants—cooperative 
wholesale buying by storekeepers and the giving of rebates. Ham¬ 
burg, Frankfort, Stuttgart, and other cities have leagues of small 
merchants for the purpose of buying their stocks cooperatively, and 
the stores operating under this system are said to be able to meet the 
cooperative prices of the consumvereine. This, of course, is merely 
one manifestation of the cooperative idea. The rebate system has 
made an apparently permanent success in several cities also. In 
Nuremberg the private dealers are organized for the purpose of carry¬ 
ing their rebate plan into effect. Chambers of commerce have advo¬ 
cated this method of combating cooperation. At Magdeburg there 
is a single firm having 60 branch rebate stores. 

ABSTRACT OF REPORT FROM CONSUL GENERAL A. M. THACKARA, 
BERLIN, GERMANY. 

The report of Consul General Thackara, of Berlin, gives a compre¬ 
hensive suvey of the history, organization, and work of cooperative 
societies in the German Empire. These associations fall roughly into 
two main groups. The societies in the first and most important 
group- draw their membership from among the artisans and small 
dealers in the cities, and from among the tenants and small land- 
owners in the country. The second group is made up of organiza¬ 
tions of brain workers, such as bank employees, teachers, army and 
navy officers,.and other professional men. 

The first group is by far the more important on account of its large 
membership as well as its economic and legislative influence, and the 
history of cooperation in Germany is mainly the history of the organ¬ 
izations comprehended in this group. These organizations may be 
arranged quite naturally in two minor groups—one including the 
societies of industrial workers, the other the societies of agricultural 
laborers and tenants. 


COOPERATION AND COST OF LIVING. 


11 


The first association .of industrial workers was founded by Schulze- 
Delitzsch in Saxony in 1849, and the first association of agricultural¬ 
ists by Raiffeissen in Rhenish Prussia in 1847. The histories of these 
two classes of cooperative societies show that the chief difficulties in 
the way of their success were lack of financial means, lack of business 
and administrative experience on the part of the members, and 
absence of legal recognition or a convenient corporate form under 
which to do business. The first of these difficulties has been met by 
the organization of cooperative banks and credit societies, and the 
second by the organization of the General Union of German Industrial 
and Economic Cooperative Societies founded on self-help. This 
‘‘General Union,” as it is usually called, acts as an adviser to the 
locals and as an agent to present their interests to the Government 
or the public. The first of the needed legislation was enacted by the 
Prussian Parliament in 1867-68, and provided for the incorporation 
of cooperative societies on the basis of unlimited liability. The law 
under which such societies now operate was enacted by the Imperial 
German Parliament in May, 1889, and permits the organization of 
cooperative societies upon the basis of limited as well as unlimited 
liability. 

The most important classes of the local associations are credit 
societies and loan associations, products societies, consumers’ soci¬ 
eties, raw material supply societies, building associations, work 
associations, sales societies, breeding associations, raw material 
supply and sales societies, and purchase societies. In addition there n 
are about 35 national central unions. Of these the four most im¬ 
portant are the General Union already mentioned, the Imperial 
Union of German Agricultural Cooperative Societies, the Central 
Union of German Consumers’ Societies, and the Principal Union of 
German Industrial Cooperative Societies. Some of the German 
societies and unions adhere to one or the other of two international 
cooperative organizations—the International Alliance of Agricultural 
Cooperative Societies or the International Cooperative Alliance. 

Opposition from both the Government and from the public has been 
directed more strongly against the associations of industrial workers 
than against the associations of agriculturalists. In fact there was a 
time when the latter organizations received subsidies from both the 
imperial and the State governments. Government aids, which went 
chiefly toward the erection of cooperative granaries, were granted 
in the eighties and early nineties, and in 1895 the Prussian Govern¬ 
ment voted State aid to the Prussian Central Bank for Cooperative 
Societies. Opposition to the credit and loan associations weakened 
when it became clear that they would operate as aids to the general 
banking business rather than competitors of it. The consumers’ 
societies, on account of their competition with retail traders, have 
faced the greatest opposition; but even this has become less hostile 
in recent years owing to the adoption of cooperative methods by the 
retailers themselves and to the growth of department stores, against 
which some portion of the ill feeling of the retail traders has been 
diverted. 

Cooperative building associations and raw material associations 
are meeting their share of opposition in proportion as they attain 
sufficient strength to encroach upon the business of competing private 
interests. The weapon used against the raw material supply societies 
is a threatened withdrawal of credit, whereas the general feature of 


12 


COOPERATION AND COST OF LIVING. 


the campaign against consumers’ societies has been the enacting of 
adverse tax legislation. The consumers’ societies complain consider¬ 
ably under this burden, for in Prussia their taxes for the fiscal year 
1910-11 equaled 7.4 per cent of the gross receipts, or 12.8 per cent 
of the net profits. 

In spite of opposition the cooperative movement in Germany has 
grown until in 1910 the total number of locals is given as 30,065. Of 
these, 23,520 report a membership of 4,471,721 and a valuation of 
property owned as $152,000,000. Cooperative organization has 
assumed such importance in the life of the German nation that it has 
become the subject of a considerable literature, a field for study by 
some of the most prominent of German economists, and the subject 
of legislation and of special lecture courses and seminars in the 
universities. 

The questions as to whether cooperative societies have led to a 
reduction of prices in Germany or have reduced the cost of living 
have not been conclusively answered. Statistics on the costs of 
administration and profits of cooperative societies seem to show that 
they perform the duties of middlemen somewhat more economically 
than persons who do the same work privately as a business enterprise. 
On the theory that any saving of middlemen’s profits accrues to the 
benefit of the consumer, some argue that a reduction in the cost of 
living is beyond dispute. Even if it is granted that cooperative 
organization affords a means capable of bringing about a reduction 
in the cost of living, it is not settled that the cooperative organiza¬ 
tions in existence in Germany have as yet done so. Dr. Hans Cruger, 
attorney of the General Union, made an investigation in 1889 as to 
prices, but did not show that cooperation had reduced them. Dis¬ 
putes between partisans and opponents of cooperative consumers’ 
societies as to the qualities and prices of goods handled by the 
societies as compared with other goods have not brought out con¬ 
vincing figures as to the advantages of the cooperative enterprises. 

Consul General Thackara considers, however, that a “defensible 
conclusion” to the effect that cooperative societies do actually save 
money for their members is attainable. The adherence of 5,000,000 
people to these associations, he writes, “can not reasonably be 
ascribed to any other main cause than a conviction on the part of a 
largo section of the population, gained by actual experience, that 
the societies bestow a tangible economic benefit in the way of a re¬ 
duction in the cost of living.” 

Herr Maucher, a director of the Karlsruhe Consumers’ Society, 
thinks that the presence of a well-conducted consumers’ society in a 
community is of beneficial effect. He declares that the instances in 
which dealers have refrained from making advances in prices out of 
deference to the competition of consumers’ societies are probably 
many; but he admits that instances in which actual reductions in 
prices have been brought about by their competition are probably 
few. He cites several cases in proof of the claim that the competi¬ 
tion of cooperative consumers’ societies has prevented an increase 
of prices, planned by a combination of independent competitors, 
and points to one case in which the benefits growing out of the re¬ 
moval of octroi duties in Karlsruhe would have been taken entirely 
by the bakers’ union through a reduction in the price of flour, if the 
consumers’ society had not reduced the price of bread and forced 
the bakers’ union to meet their competition. 


REPORTS ON COOPERATION AND THE COST OF LIVING FROM 
CONSULAR OFFICERS IN THE GERMAN EMPIRE. 


BERLIN. 

(In compliance with special instruction, consular, No. 66, “ Cooperation and the Cost of Living.” American 
consulate general, Berlin, Apr. 6, 1912. A. M. Thackara, consul general.] 

Cooperative Societies in Germany and Their Effect on the Cost of Living. 

Cooperative societies are of more recent inception in Germany than in several other 
countries of Europe, but in none have they enjoyed a more rapid growth. The first 
German cooperative society was founded slightly more than 60 years ago. To-day it 
is estimated nearly 30,000 societies, embracing a membership of close to 5,000,000, are 
in operation within the Empire. 

The concrete forms in which they appear are so many as to defy exhaustive enumera¬ 
tion. Among them two main groups may, however, be roughly distinguished. 

]. On the one hand are those societies which find the greater part of their member¬ 
ship in the cities among the aitisans and small dealers and in the country among the 
tenant fanners and small landowners. The general aim of these societies, in common 
with those in the group yet to be described, is reduction in the cost of living. But 
added to this is another aim, which is to effect a betterment in the social and economic 
position of the members, or even to bring about a profound economic revolution. 
Thus one finds in a handbook, 1 prepared by one of the general unions for the use of 
the organizers of consumers’ societies of this kind, that the aims of a society should be: 

To distribute the necessaries of life cheaply. 

To provide good and honest wares. 

To educate the members in thrift by insistence on cash payments. 

To lessen class distinction by a union of effort on the part of members of different 
callings. 

This is a summary of the aims of those societies which are least imbued with recon¬ 
structive ideas. Societies of the other extreme avowedly seek to replace the present 
capitalistic scheme of production and distribution with a general adoption of the 
cooperative method of doing business. 2 

2. On the other hand, are those societies which find their membership almost solely 
in the cities and there chiefly among brain, as distinguished from hand, workers. Such 
are Government officers and employees, including army and navy officers, teachers, 
bank employees, clerks, professional men, etc. These societies, in the great majority 
of cases, at least, are purely utilitarian organizations aiming only to reduce the cost 
of living, without reference to considerations of uplift or any form of economic recon¬ 
struction. So slight indeed are the common interests of their members in many 
cases that leaders among the societies of the first group are prone to deny altogether 
to societies of the second group the character of true cooperative institutions. Never¬ 
theless there can be no question that cooperation is their working principle and that 
they must be included in any comprehensive examination of the cooperative move¬ 
ment in Germany. 

It might be possible to erect a third group including the stores maintained for the 
benefit of their employees by certain large industrial concerns such as the Friederich 
Krupp Co. In certain externals these institutions resemble consumers’ societies, for 
example, in that they often divide profits periodically among the purchasers on the 
basis of the amount of purchases made. As a matter of fact, however, they are con¬ 
ducted not cooperatively, but by a branch of the factory management, and they can 
not, therefore, in the writer’s opinion, be properly considered cooperative societies. 3 


1 Handbuch fur Konsumvereine, p. 3. 

2 See Muller: The Historical Development of the International Cooperative Movement, passim. Printed 
in 1910 Yearbook of International Cooperation. 

2 See report on Krupp Konsum-Anstalt at Magdeburgh, by Vice Consul Ives transmitted to the depart¬ 
ment by Consul Donegan under date of Feb. 2,1912. 




14 


COOPERATION AND COST OF LIVING. 


I. 

SOCIETIES OF THE FIRST GROUP. 

Historical development .—The societies of the first group are the outgrowth of the co¬ 
operative movement as started by Herman Schulze, usually known as Schulze- 
Delitzsch, and Wilhelm Friederich Raiffeisen, and it is largely from certain elements, 
similar and dissimilar, in the personalities of these two men that they have drawn 
the social and economic characteristics which have been used to distinguish them from 
the societies of the second group. 

Both Schulze-Delitzsch and Raiffeisen were philanthropists, but while the former 
was an eminently practical and business-like turn of mind, the latter was predomi¬ 
nated by an impulse for Christian work which by its intensity seemed often to blur his 
appreciation of the exigencies of practical life. Owing to this divergence in the per¬ 
sonal characters of the two men, rather marked differences are found in the historical 
development of the societies founded on their respective systems. These differences 
stand out the more clearly because the Schulze-Delitzsch societies have for the most 
part drawn their membership from the industrial, and the Raiffeisen societies from the 
agricultural population. 

In 1849 Schulze-Delitsch organized in Delitzsch, Saxony, where he occupied a 
judicial position, the first real German industrial cooperative society in the form of a 
so-called raw material association. Its business was the purchase of raw material 
for the artisans, principally shoemakers and cabinetmakers, who made up its member¬ 
ship. In the following year Schulze-Delitzsch organized the first German industrial 
credit society. 

Raiffeisen, then burgomaster of Weyerbusch in Rhenish Prussia, had in the mean¬ 
time become interested in cooperative organization, and, in the hope of lessening the 
high prices of bread then prevailing, formed in 1847 the first German agricultural 
cooperative society—a cooperative baking association. Two years later he organized 
in Flammersfeld a mutual aid society for indigent farmers, the aim of which was to free 
its members from the necessity of making usurious loans on their cattle. This society 
developed some years later (1864) into a regular agricultural loan association, the first 
of its kind in Germany. 

The societies having their genesis in Schulze-Delitzsch’s efforts spread more rapidly 
than those inaugurated by Raiffeisen. This was due in part to the higher centraliza¬ 
tion and less conservative tendencies of the industrial classes from which their member¬ 
ship was drawn, and in part to Schulze-Delitzsch’s practical methods. By 1864, when 
Raiffeisen formed the first agricultural loan association, it is said that 600 credit 
societies of the Schulze-Delitzsch type were in operation. Other forms of cooperative 
societies existed in lesser number. 

This progress was made despite many difficulties. The chief among them were: 
(1) Lack of financial means; (2) lack of business and general administrative experi¬ 
ence on the part of the members, as well as lack of coherence among the societies; and 
(3) the absence of legal recognition and a convenient corporate form under which to do 
business. Added to these difficulties was the opposition which the societies, now 
grown to sufficient number to attract general attention, encountered from conservative 
quarters and especially from those in trade who began to feel the increased competition 
which the injection of this new form of business enterprises into the community 
created. 

With a view to meeting the first of these difficulties, Ludolf Parrisius and Alwin 
Sorgel, coworkers of Schulze-Delitzsch, established in 1864 the German Cooperative 
Bank of Sorgel, Parrisius & Co. It was organized as a joint stock company with a capi¬ 
tal of 825,000 marks ($196,350). It undertook to afford credit to adhering societies, 
and soon after its establishment installed a union among them for effecting monetary 
settlements by means of book transfers (giro). The bank continued in existence for 
40 years. When it was absorbed by the Dresdner Bank in 1904 its capital amounted 
to 35,000,000 marks ($8,330,000) and it maintained besides its central offices in Berlin 
a branch at Frankfort on the Main. 1 

The solution of the second chief difficulty encountered by the Schulze-Delitzsch 
societies was sought through the organization of the General Union of German Indus¬ 
trial and Economic Cooperative Societies Founded on Self-Help, usually called simply 
the General Union. This central organization came into existence during a period 
extending from 1859 to 1864. It existed first as a sort of central correspondence bureau, 
later as a legal advisory bureau, and finally in its present form. Its first attorney or 
chief administrative officer was Schulze-Delitzsch—now retired from the bench in 


1 See Miscellaneous Articles on German Banking, pp. 238-239. 



COOPERATION AND COST OF LIVING. 


15 


order that he might devote his entire time to fostering the cooperative movement— 
and under his guidance it undertook the work, which it still continues, of providing 
the officers of local societies with the legal and commercial information and advice 
requisite to the proper conduct of the societies’ activities, as well as the representation 
of the societies’ interests before the Government and elsewhere. 1 

As a part of his work as attorney of the General Union Schulze-Delitzsch undertook 
to remove the third chief difficulty with which the societies were contending—the 
absence of legal recognition and of a convenient corporate form under which to do 
business. After several years of constant effort he was so far successful that in the 
session of 1867-8 the Prussian Parliament enacted into law a bill which Schulze-De¬ 
litzsch had himself drafted. A year later this law became operative for the North 
German Federation, and, after the formation of the Empire, for all of Germany. It 
afforded the cooperative societies a convenient corporate form on the basis of unlimited 
liability. 

The Raiffeisen or agricultural societies had not in the meantime been growing so 
rapidly or so sturdily. The associations law of 1868, the passage of which had been the 
work of Schulze-Delitzsch, of course served the Raiffeisen societies as well. The work 
of erecting a central banking agency and of establishing some central administrative 
organization was as yet, however, before them when the decade of the seventies opened. 

The need for a central bank was felt with especial keenness. Owing to the uni¬ 
formly agricultural character of the membership of these societies the demand for credit, 
instead of being distributed throughout all seasons of the year, was highly synchronized. 
The result was that the associations had an abundance of money on hand at certain 
times and a scarcity at others. To remedy this situation Raiffeisen established at 
Neuwied in 1876 the Central Agricultural Loan Bank. It was organized as a corpora¬ 
tion with a capital of 500,000 marks ($119,000), and only cooperative societies were 
allowed to acquire its shares. 

To satisfy the need of his societies for a central administrative organization, Raiff¬ 
eisen organized in 1877 what is usually known as the Neuwied Union. This institu¬ 
tion undertook to do for the Raiffeisen societies what the General Union was doing for 
those founded on the Schulze-Delitzsch system. At the outset it met only a very 
moderate degree of success. It has, however, continued to exist, although it is to-day 
practically consolidated with what was at the time a competing organization. 

Among the causes for the backwardness of the Raiffeisen societies during the period 
up to 1889 must be set down the less centralized and more conservative character of 
the agricultural population, already adverted to, but more particularly the ill-success 
of Raiffeisen as an organizer as compared with Schulze-Delitzsch. As early as 1864 
instances were noted of disaffection among certain of the Raiffeisen organizations. 
By the middle of the seventies opposition to Raiffeisen’s views became well marked, 
and in 1879 an independent Hessian federation sprang up. “The determining motive 
for this secession was not divergence of opinion in matters of organization, but the fact 
that many were repelled by the pietistic tendencies of Raiffeisen and his dogmatism 
and mysticism as to the purposes of the societies.” 2 The seceding societies allied 
themselves with a number of Schulze-Delitzsch organizations and formed, in 1883, the 
Federation of German Cooperative Agricultural Societies, the forerunner of the Imperial 
Union of German Agricultural Societies, with which, as was above indicated, the 
Neuwied Union is now almost indistinguishably amalgamated. 

Statistics showing the actual number of Raiffeisen societies in existence at the 
time of Raiffeisen’s death in 1888 are not available. It was not large. It is esti¬ 
mated that on July 1, 1890, the total of agricultural cooperative societies of all kinds, 
of which the Raiffeisen societies made up only a part, was 3,006. Of these 1,729 
were loan associations, 537 supply societies, 3 639 milk-vending societies, and 101 
miscellaneous. 4 


1 See Cruger: Die Aufgaben unserer Organization. 

2 Miscellaneous articles on German banking. 

3 For German equivalents of this and all other proper and technical names occurring in this report, see 
Glossary at end. 

4 Jahresbericht des Generalanwalts des Reichsverbandes fur 1910-11. 



16 


COOPERATION AND COST OF LIVING. 


The number of Schulze-Delitzsch societies, as shown by the membership of the 
General Union, had increased in the following manner since 1859: 1 


Year. 

Credit 

societies. 

Con¬ 

sumers’ 

societies. 

Building 

associa¬ 

tions. 

J Miscel¬ 
laneous. 

Total. 

1859. 

27 




27 

1801.. 

109 



21 

130 

1865. 

447 

25 


43 

515 

1870. 

721 

97 

1 

26 

845 

1875. 

822 

237 

16 

57 

1,132 

1880... 

812 

200 

2 

44 

1,058 

1885. 

824 

171 

1 

37 

1,033 

1890. 

1,043 

284 

5 

29 

1,361 




There were also in existence other societies, number unknown but doubtless large, 
which, not being affiliated with the General Union, are not included in the foregoing 
statistics. It is estimated that in 1890 there were in all 984 consumers’ societies, 
with a total membership of 215,420. 2 

As a result of the expansion in membership and business activity which the societies, 
especially those formed by the industrial workers, had undergone since 1868, it was 
found that the associations law passed in that year had become inadequate. On 
May 1, 1889, the Imperial German Parliament enacted a new law, being the one 
which now subsists. Among the innovations which it embodied the following are 
the chief: 

It permitted the organization of cooperative societies on the basis of limited as 
well as of unlimited liability. 

It permitted the formation of societies of societies. 

It introduced a system of audit. 

It restricted the operations of credit and consumers’ societies to the membership 
of each. 

The restriction of the business operations of consumers’ societies operated at the 
time to reduce the number of those institutions. Certain of them had acquired, in 
connection with the extensive business which the patronage of outsiders enabled 
them to carry on, real property and other holdings under the weight of which they 
could not hope to keep afloat should that patronage be withdrawn. Furthermore, 
many of them were not disposed to forego the profits, distributed to the individual 
members in the form of dividends and rebates, which their extensive operations 
yielded. The result was that a by no means inconsiderable number gave up their 
cooperative form of organization and reorganized as corporations, continuing their 
businesses as private enterprises, and losing all real connection with the cooperative 
movement. 

On the whole, however, the effect of the new law was to further the cooperative 
movement. The permission to organize on a limited liability basis was largely 
availed of, and many who had formerly held aloof because they did not care to incur 
the full personal responsibility involved in membership in an unlimited liability 
organization becatne me. - “df reorganized societies or joined in the formation of 
new ones. The permission'to form societies of societies also encouraged expansion. 
This was especially noticeable among loan associations of all kinds, which took advan¬ 
tage of the opportunity to organize central banks with a view to increasing their 
credit facilities. Other central organizations were formed in connection with the 
new audit system, which allowed the societies the option of having their books gone 
over by auditors named by the local courts or by public auditors hired by audit 
unions made up of individual societies. Even the restriction of the business of 
the consumers’ societies was not without its helpful effect, for many who had 
formerly dealt as nonmembers with the stores maintained by these societies now 
became members in order that they might continue to enjoy the* advantages which 
they believed attached to such dealings. 

Aside from the new law, other causes, both general and particular, contributed at 
this time to accelerate the formation of cooperative societies. This was especially 
noticeable among the agricultural societies, the number of which increased from 
3,006 in 1890 to 13,638 in 1900. 3 Among the indirect causes for this growth may be 
mentioned the general economic expansion which took place at this time throughout 


1 Jahrbuch des Allgemeinen Verbandes fur 1910, p. li. 

2 Handbuch fur Konsumvereine. 

3 Jahrbuch des Reichsverbandes, 1910, p. 13. 






















COOPERATION AND COST OF LIVING. 


17 


the country, and among the direct causes, State aid. As early as 1882 the Neiiwied 
Federation had received a gift of 30,000 marks ($7,140) from the Emperor William I and 
another of 20,000 marks ($4,760). Other subsidies followed, especially during the latter 
eighties and early nineties, not only from Imperial sources, but from a number of 
the State governments, which contributed especially toward the erection of cooper¬ 
ative granaries. 

The one instance of State aid which probably produced the most marked influence 
was the establishment by the Prussian Government in 1895 of the Prussian Central 
Bank for Cooperative Societies. The purpose of this institution, which still exists, 
was to meet the credit needs of the agricultural loan associations by acting as inter¬ 
mediary between them and the general money market, and it restricted its operations 
to those associations which were organized on a cooperative basis. 1 Dr. Hans Cruger, 
the present attorney of the General Union, estimated in 1899 that of the 10,900 credit 
societies then in operation 40 per cent had come into- existence in order that they 
might qualify for the credit facilities offered by this bank. 2 

The new Government institution served to supplement the work being carried on 
by the Central Agricultural Loan Bank. As a further supplement to the cooperative 
1 anking system a new private institution—the Imperial Agricultural Societies’ 
Bank—was organized at Darmstadt in 1902 under the auspices of the Imperial Union. 
It now plays an important r61e in the financial operations of the agricultural credit 
societies, acting as clearing house for those situated outside of Prussia, as the Prussian 
1 ank does for those situated within the Kingdom. 3 

The attitude of the State toward the industrial wing of the cooperative movement 
during these years had l een quite other than that which it had assumed toward the 
agricultural. The industrial societies, especially the consumers’ societies, had aroused 
opposition among tradesmen and others with whose private enterprises their operations 
came into competition, and the influence which these classes brought to bear was not 
without its effect on the course of the Government. As has already been related, the 
law of 1889 prohibited consumers’ societies selling to nonmembers. This was 
strengthened by a supplementary law passed in 1895, which made a breach of the 
prohil ition punishable by fine. Also during these years various new taxes were 
imposed, especially on the consumers’ societies, which are regarded, in cooperative 
quarters, as onerous and to a degree unfair. 

Despite this absence of State aid and possibly some measure of actual State oppo¬ 
sition, the consumers’ and other industrial societies made sturdy progress. By the 
opening of the new century they had become, by their number and the extent of 
their operations, so important an element in the economic life of the nation that the 
question was precipitated as to what should be their attitude toward other forms of 
production and distribution. A resolution on this subject was passed at the annual 
meeting of the General Union held at Kreuznach in 1902. It recited that the aim of 
the cooperative movement should not be to supplant or revolutionize the existing 
economic scheme but only add another to the existing instruments of production and 
distri’ ution. Some 200 consumers’ societies, the members of which held divergent 
views as to the ends which their organizations should seek to obtain, withdrew from 
the General Union and shortly afterwards formed the Central Union of German Con¬ 
sumers’ Societies. 4 5 

Present situation and extent .—During the sixty-odd yeai o 1 its past existence in 
Germany the cooperative movement has entered ’ r elds and been manifest in 
societies of widely divergent aims. There have bet>i. societies for the cooperative 
ownership and working of land, but they are now gone. Even more Utopian and 
ephemeral have been societies in which barter was to replace the use of money, all the 
fruits of the labor of the members being turned into the society for redistribution in 
accordance with the members* various needs. One such projected institution sought 
a membership half agricultural and half industrial in order that a complete self- 
sufficiency might exist. Other societies have been formed by master workmen with a 
view to controlling their trades in particular localities as the guilds did in earlier days. 
And still others have been formed among small producers to regulate competition. 
Some of these last still exist. On the whole, however, the movement is now fairly 
well crystallized, and while there is no standard classification it is possible to name 


1 For a full account of the history and functions of this institution see Jeiligenstadt; Die Preussische 
Zentralgenessenschaftskasse, printed in English in Miscellaneous Articles on German Banking, pp. 429-440. 

2 Cruger: Aus Vergaggenheir und Gengenwart der deutsc-hen Genossenschaften, p. 19. 

s Wittner and Wolff: Methods of Payment by Means of Bank Account Transfers in Germany, p. 241. 
Printed in English in Miscellaneous Articles on German Banking. 

4 Cruger: Einfuhrung in gas Genossenschaftswesen, p. 222. 

5 For further information relative to the historical development of cooperative societies in Germany see, 
among other sources, Cruger: Aus Vergangengeit und Gegenwart der deutschen Genossenschaften; and 
Cruger: Cooperative Credit Societies, printed in English in Misc. Art. on German Banking, pp. 441-400. 

H. Doc. 833, 62-2-2 




18 


COOPERATION AND COST OF LIVING. 


one by one the general tvpes of societies which are at present of economic impor¬ 
tance. It must le understood, however, that while the activities of some societies 
are limited to one special form of 1 usiness the activities of others are so diversified 
that each such society is representative of two or more general types. The list of the 
more important types follows, the arrangement ’ eing in accordance with the present 
approximate numerical strength of each: ... . . 

Credit societies and loan associations. —These institutions aim to provide their mem¬ 
bers with the necessary capital to carry on their particular lines of endeavor. They 
employ the combined credit of the membership to borrow money in large sums which 
they in turn loan to individual members in smaller amounts according to their needs 
and responsibility. They also serve as bankers for their members, receiving both 
open and savings accounts, and some of them conduct a limited mercantile business 
as well. _ . . 

Products societies. —These societies sometimes engage in production themselves, but 
the greater number only assemble, prepare for sale and sell on joint account the prod¬ 
ucts of their members—farmers or artisans—aiming to secure for them thereby the 
advantages of large-scale dealing. 

Consumers’ societies which purchase goods—for the greater part food, clothing, and 
household necessities—at wholesale, and sell to the members at a slight advance in 
price or occasionally at cost. In some instances these societies also receive savings 
deposits and administer a mutual building fund. 

Raw material supply societies , which purchase at wholesale the raw materials needed 
by their members and sell at retail at a sufficient advance in price to cover the cost of 
operation and yield a slight profit. 

Building associations. —These are of two kinds. In one kind, the members build 
their own houses by means of a long-term loan obtained from the association. In the 
other, the association erects dwellings which it either rents to its members or sells to 
them on the installment plan. 

Work associations, which purchase machinery and implements for sale to their mem¬ 
bers, or more often for their joint use, ownership remaining in the association. 

Sales societies, which provide and maintain salesrooms, or even buildings, in which 
the products of the members, produced in their own shops or on their own farms, are 
sold on joint account. 

Breeding associations, for the joint ownership of studs, etc., and for the maintenance 
of breeds. 

Combined raw material supply and sales societies. —In connection with the mainte¬ 
nance of salesrooms, certain sales societies also purchase raw materials for their mem¬ 
bers after the manner of raw material supply societies. They are sufficiently numer¬ 
ous to be separately classified. 

Purchase societies, which resemble consumers’ societies, but differ in that they are 
maintained not by ultimate consumers but by retail merchants for the purchase coop¬ 
eratively of the goods which they carry in stock. 

Official statistics showing the exact numerical strength of the different kinds of 
cooperative societies are not to be had for a more recent date than 1908. The last year¬ 
book of the General Union contains, however, a statistical resume 1 of the growth of all 
the societies in Germany, and the following figures, showing the number of each kind 
of society, and taken from that source, may be considered practically correct. They 
are for the year 1910. 


Credit societies, agricultural and industrial. 17, 493 

Products societies, agricultural. 3, 745 

Products societies, industrial. 415 

Consumers’societies. 2,311 

Raw material supply societies, agricultural. 2, 064 

Raw material supply societies, industrial. 394 

B uilding associations. 1, 056 

Work associations, industrial. 766 

Work associations, agricultural. 601 

Sales societies, agricultural. 450 

Purchase societies. 224 

Combined raw material supply and sales societies, industrial. 128 

Miscellaneous. 418 


T otal... ..... . . .. 30,065 


1 Jahrbuch des Ailgemeinen Verbandes, 1910, pp. xm-xv. 






















COOPERATION AND COST OF LIVING. 


19 


The greater number of the above societies are agricultural. The last yearbook of 
the Imperial Union gives 1 2 the statistical status of agricultural cooperative societies in 
Germany on June 1, 1910, as follows: 


Agricultural credit societies. 15 ? 476 

Products societies (milk vending). 3’ 325 

Purchase and consumers’ and raw material supply societies. 22, 249 

Miscellaneous. 2, 701 


Total. 43,751 


As these statistics are roughly comparable with those just given for all kinds of 
societies, it may be said that in 1910 there were altogether about 6,300 industrial 
societies as compared with 43,751 agricultural. The Imperial Union, which embraces 
four-fifths of the agricultural societies, is, indeed, numerically the largest cooperative 
organization in the world. The General Union, which draws its membership almost 
altogether from the industrial population, surpasses it, however, in point of the total 
amount of business done by its constituent societies. 

fiAt the close of 1910, 23,520 out of the total of 30,000 or more societies in the Empire 
made returns to the General Union of their membership and business. According to 
the returns the total membership of the reporting societies was 4,471,721; the total value 
of their property assets amounted to $152,000,000; the total amount of business done 
in the way of furnishing credit, food, dwellings, raw material, etc., figured up to 
$5,500,000,000; and the total amount of outside capital employed, to $300,000,000.-’ 

Central unions .—There are about 35 central unions of cooperative societies in Ger¬ 
many. Only four of them are, however, sufficiently large to be considered imperial 
in their scope. These are: 

The General Union of German Industrial and Economic Cooperative Societies 
Founded on Self-Help. 

The Imperial Union of German Agricultural Cooperative Societies. 

The Central Union of German Consumers’ Societies. 

The Principal Union of German Industrial Cooperative Societies. 

Each of these central unions embraces a number of smaller provincial and audit 
unions. In the General Union there are 32 such; in the Imperial Union, 41. 

The chief work of the central unions is the fostering of the cooperative movement 
so far as it comes within the. field particularly covered by each. The particular 
field of the Imperial Union is among the agricultural societies, principally the loan 
associations, of which it comprises at the present moment 13,325. It embraces no 
consumers’ societies or building associations. The consumers’ societies, especially 
those holding to socialistic or other radical economic views, belong in large numbers 
to the Central Union, which is limited to this field. Some 250 consumers’ societies 
of a more conservative character adhere to the General Union, together with a thou¬ 
sand or more industrial credit societies, some 200 building associations, and 50 mis¬ 
cellaneous artisans’ purchase and distributive societies. The principal union is 
small, embracing about 150, principally industrial sales and raw material supply, 
societies. 3 

Not a small part of the work of the central unions is propagandist. They issue 
literature explaining the nature of the cooperative societies and recounting the advan¬ 
tages which they offer. They foster the formation of new societies by issuing hand¬ 
books, sample by-laws, etc., for the assistance of those who undertake the work of 
organization. ' Other books issued by them are for the guidance and instruction of 
officers of societies already in operation. They also give advice as to special legal 
and business problems which arise. 

They participate in all matters which have in any way a general bearing. They 
represent the societies before the legislatures and executive departments of the 
Imperial and other governments and assist them in judicial controversies. Each of 
the four principal ones publish yearly a resum6 of the business done by its socie¬ 
ties, and three of them add to this a report on general progress, including an account 
of all new legislation of interest passed or pending. 4 

In addition to the national central organizations there are two international unions 
to which some of the German societies and unions of societies adhere. The Inter¬ 
national Cooperative Alliance, with headquarters in London, embraces about 150 
German consumers’ and other distributive societies, principally those which in 1902 
withdrew from the General Union on account of their advanced economic ideas. In 


1 Jahrbuch des Reichsverbandes, 1910, p. 9. 

2 Jahrbuch des Allgemeinen Verbandes, 1910, p. xvn-J. 

3 See Geschaftsstatistik fur das Jahr 1909, herausgegeben von dem Hauptverband. 

* See Cruger: Die Aufgaben unserer Organization. 









20 


COOPERATION AND COST OF LIVING. 


1910 they subscribed about $1,200 to the support of the alliance, and in that year 
the International Congress of the Alliance was held in Hamburg. 1 

The other international organization is the International Alliance of Agricultural 
Cooperative Societies, which has its headquarters in Darmstadt, Germany. Founded 
January 1, 1907, by certain central unions of agricultural societies in Germany, Italy, 
Austria, and Switzerland, it embraced on September 1, 1910, 33,000 separate socie¬ 
ties, represented through the medium of 10 national central unions, including the 
Imperial Union of Germany. The following nations were represented: Bulgaria, 
Germany, Finland, France, Italy, Netherlands, Austria, Switzerland, Servia, and 
Hungary. 2 

The work of both international organizations is chiefly missionary. 

II. 

SOCIETIES OF THE SECOND GROUP. 

Of the societies of the second group there is little to be said. This, not because 
they are unimportant. It is due partly to the absence of all central organization 
among them, so that general data are not available, and partly to the fact that the 
chief points in what history they can boast of have been touched upon in the pre¬ 
ceding chapter; for example, legislation and its effect on the form of cooperative 
organizations. 

Some of the societies came into existence as early as the sixties. The Household 
Society of Hanover, a typical organization of this sort, was founded in 1863 by a 
number of municipal and government officials for the purpose of securing food and 
household necessities more cheaply than was possible in the shops. Later on phy¬ 
sicians, lawyers, and army officers were admitted. During its early years the society 
languished. In 1875-6 it nearly succumbed under the weight of heavy losses sus¬ 
tained in connection with a scheme by which the society was to do its own slaugh¬ 
tering. Not until 1888 were any dividends paid. Since then the society seems to 
have flourished. 

As in the case of the Hanover society, most of those of the second group are of 
limited membership. The most usual limitation is to government officials. It is 
from this fact that they draw their very common designation of officials’ societies. 
It is to this fact also that they owe the greatest impetus which their growth has ever 
received. The opposition which the development of all kinds of cooperative socie¬ 
ties excited directed itself particularly against officials who had become affiliated 
with cooperative organizations, as owing to their public positions they seemed most 
susceptible to legislative correction. The result was the forced withdrawal of many 
officials from the regular societies and the formation of new ones exclusively for 
themselves. 3 

The heyday of the formation of officials’ societies seems to have been in the eighties. 
In 1884 the German Officers’ Society of Berlin was organized. Its membership was 
made to include (1) active and retired army and navy officers, officers of the health 
service, marine engineers, and (2) active and retired chief officials of the military 
and naval administrations. This society now maintains a large cooperative store in 
Berlin called the Army and Navy House. 

With few exceptions the organizations of this second group are consumers’ societies. 
Some of them are of peculiar kind not found among the societies of the first group. 
Such are the Teachers’ and Bank Employees’ Societies of Berlin. They maintain no 
stores of their own. Their activities are confined to making contracts with dealers 
under which members of the society on identification as such, usually by card, receive 
a rebate on all goods purchased varying from 5 to 20 per cent. 

No statistics exist showing the present numerical strength or the extent of the 
business carried on by the societies of the second group. Their number is probably 
700 or 800. Of the business carried on it can only be said that it is sufficiently exten¬ 
sive to be considered of large importance by the retailers, wholesalers, and manufac¬ 
turers who in different instances profit from it. 


XIV e Jn,T °* the Proeee<lings of the Eighth Congress of the International Cooperative Alliance, 1910, pp. 


2 Geschaftsbericht des InternationalenBundesder landwirtschaftlichen Genossenschaften,1910,pp. 32-33. 

3 See Jahrbuch desZentralverbandes, 1911, Vol. I, p. 60. 




COOPERATION AND COST OF LIVING. 


21 


ill. 

LAW RELATING TO COOPERATIVE SOCIETIES. 

Of the seven forms of incorporation recognized by German law, one exists especially 
for the benefit of cooperative societies. It was created by the act of May 1, 1889. 

The act provides that an association which aims to assist its members in their eco¬ 
nomic enterprises through mutual or cooperative effort may acquire juristic personality 
and the right to carry on a mercantile business by organizing in accordance with its 
provisions and registering in the register of associations. 

Permission by the state is not prerequisite to organization and registration. 

The by-laws of a society applying for registration must be written down in detail 
and be sufficient to meet all legal exigencies, especially with reference to general 
meetings and the manner of calling them. 

The nature of the individual liability of the members for the obligations of the 
society must be clearly specified. In this regard the law provides three bases of 
organization: (1) Unlimited liability", (2) unlimited assessment liability, and (3) lim¬ 
bed liability. Under the second scheme the creditors of a society must first have 
recourse to its property. When this is exhausted, they may not proceed against the 
individual members but may secure the imposition of an assessment on the member¬ 
ship sufficient to liquidate their unpaid claims. The assessment is laid by a com¬ 
mission in bankruptcy and each member of the bankrupt society is liable for the 
payment of his assessment to the full extent of his property. Under the third plan of 
organization—that is, limited liability—the liability of the individual members of a 
society to the creditors thereof is limited to a specified sum. This sum may not be 
less than the entrance fee originally paid by the member, and may be increased to 
any amount by the concurrence of a three-quarters majority at a general meeting of 
the society. Uaving been- raised above the legal minimum, the limit of liability 
may not be again reduced except by the same vote which is required to effect a distri¬ 
bution of the property of the society following dissolution. Whenever the debts of a 
society exceed the combined individual liability of all the members by 25 per cent, 
proceedings in bankruptcy must ensue. 

Of the three kinds of liability, the older form of unlimited liability still remains 
the most in vogue, owing to its very general adoption by credit societies. Of the 
30,555 cooperative societies registered January 1, 1911, 19,639 were organized on that 
basis, 10,751 on the basis of limited liability, and 165 on the basis of unlimited assess¬ 
ment liability, or, respectively, 64.3, 35.2, and 0.2 per cent. 1 

The law requires that every registered cooperative society shall have its accounts 
audited every other year by a. professional auditor who is not a member of the society. 
In the case of societies which belong to legally organized audit unions, the auditor 
may be designated by such union. Otherwise he is designated by a competent court 
of law. 

The law outlines the administrative organization of each society. This includes, 
first, a general meeting in which each member has one vote, regardless of his stock 
holdings, and, secondly, a board of managers and a board of supervisors. The board of 
managers, which must consist of at least two members, is charged with the actual 
conduct of the society’s business and it is its legal representative. The board of 
supervisors, which must consist of at least three members, is charged with the over¬ 
sight of the work of the board of managers. Both boards are elected by the member¬ 
ship in general meeting and are answerable-to it. 

This scheme of organization is closely analogous to that of a German corporation. 
The most distinctive difference is that v while in a general (stockholders’) meeting of 
a corporation each person votes according to the amount of stock he holds or repre¬ 
sents, in a general meeting of a cooperative society it is the rule that each member 
shall have but one vote without reference to the extent of his interests in the fira icial 
affairs of the societv. 

The dissolution of a society may occur (1) by the expiration of a previously deter¬ 
mined period of time, (2) by the concurrence of a majority (three-quarters unless 
otherwise provided) of a general meeting, (3) by bankruptcy, (4) by the membership 
falling below seven, in which case a court must order the dissolution, and (5) on the 
action of the Government following a decision that a society has broken the law or 
has otherwise acted against public policy. If, on the dissolution of a society, it is 
found that its property is not sufficient to meet the outstanding debts, bankruptcy 
proceedings follow; if the property is more than sufficient, the surplus is divided pro 
rata among the members. 

Jahrbuch des Allgemeinen Verbandes, 1910, p. XXXVIII. 


22 


COOPERATION AND COST OF LIVING. 


The law provides for the establishment of unions of societies for the purpose of 
carrying out the audits described above and for the creation of general or central 
unions, the members of which are societies and not individuals. 1 

The opportunity to organize under this law as “registered cooperative societies” 
has been almost universally availed of by all forms of cooperative enterprise. There 
are a few societies of an unquestionably cooperative character which are organized as 
corporations, but the number is negligible. On the other hand a considerable number 
of enterprises which are not truly cooperative have taken this form of organization 
for business reasons. 

The number of organizations registered under this law is not, therefore, an alto¬ 
gether accurate indication of the extent of the cooperative movement. Possibly a 
more exact criterion is the number of societies making statistical returns to the General 
Union (23,520 in 1910), in which are comprised probably 90 per cent of all truly 
cooperative enterprises. 

IV. 

METHODS OF OPERATION. 

The cooperative credit societies of Germany are an integral part of the nation’s 
domestic banking system, and a detailed account of their methods of operation would 
be beyond the scope of this report. Furthermore, full information in regard to them 
may be had in English in the volume entitled “Miscellaneous Articles on German 
Banking,” published by the American National Monetary Commission. 2 

In general, it may be said that they operate largely with outside capital which is 
loaned to them on the combined credit of their members, the more usual form of organi¬ 
zation being that of unlimited liability. As mediums between the societies and the 
general money market stand (1) the cooperative department of the Dresdner Bank, 
with offices in Berlin and Frankfort on the Main, which serves principally the 
societies belonging to the General Union, and (2) the Prussian Central Cooperative 
Bank, the Central Agricultural Loan Bank, and the Imperial Agricultural Societies’ 
Bank, which serve principally the agricultural credit societies. The Prussian Central 
Bank is a Government institution. The others are private. 

Credit may be granted by the societies only to their members. The Schulze- 
Delitzsch, or in general the industrial credit societies, seek their membership, that is, 
their clientele, among persons of as widely diversified interests and occupations as 
possible, including farmers, in the belief that such diversification lends stability to 
their business. They grant only short-time loans (three to six months), extending 
them for equal periods, if the borrower is responsible and requests it. 

The Raiffeisen or agricultural societies, on the other hand, limit their membership 
to farmers and the extent of the operations of any one institution to a small geographical 
circumscription, usually the parish. One result is that there are many Raiffeisen 
societies having memberships no greater than 20. Loans made are often for long peri¬ 
ods, as long as 10 and 20 years. 

The administrative officers of a Raiffeisen society receive no compensation. The 
capital shares are usually in small denominations (10 and 20 marks—$2.38 and $4.76), 
and until recently little or no effort has been made to build up a capital fund, out of 
which loans might be made without recourse to the outside money market. Dividends 
are usually limited in the by-laws to a low percentage or are foregone altogether. 

In the Schulze-Delitzsch credit societies, the members of the board of manager? 
receive salaries and the members of the board of directors compensation of some sort. 
The capital shares are usually written in denominations of M. 300 ($71.40) and up 
such dividends are paid as the business warrants, and special stress is laid on the 
building up of a reserve and capital fund. 3 

The report by Consul Shank, of Mannheim, describes the modus operandi of the 
Industrial Bank of that city; and the report by Vice Consul Fricke describes the 
organization and operation of the Savings Industrial Bank of Leipzig. Both are 
industrial cooperative credit societies, the first being organized on the basis of limited 
liability and the second on the basis of unlimited liability. 

In addition to doing a general banking business, like the two foregoing banks, the 
Raiffeisen or agricultural banks purchase fodder, seed, and manure for their members. 
In making their purchases the banks very largely avail themselves of the central 


1 See on the law of cooperative societies, Meyer: Konversations-Lexikon, VII: 571 et sen., and Birkmeyer 
Eneyklopadie der Rechtswissenschaft, p. 621. 

2 Miscellaneous Articles on German Banking, Sen. Doc. No. 508, 61st Cong., 2d sess., see particularly 
pp. 112,238, 429, and 441. See also Interviews on the Banking and Currency Systems of England, (iermanv. 
etc., Sen. Doc. No. 405 , 61st Cong., 2d sess., pp. 441 and 452. 

3 Criiger: Aus Vergaggenheit und Gegenwart der deutsc-hen Genossenschaften, pp. 49-51. 




COOPERATION AND COST OF LIVING. 


23 


purchasing and selling machinery which is maintained by the united effort of the 
societies of the Imperial Union. This machinery consists primarily of 27 central 
purchase and sales societies or agencies, distributed throughout the various States 
of the Empire. In addition there are (1) the so-called goods department of the Central 
Agricultural Loan Bank for Germany, (2) the Central Agency for the Purchase of 
Machinery, (3) the Central Agency for the Building of Machinery, and (4) the Imperial 
Union itself. 

The business of the Imperial Union in this department is limited to the purchasing 
of fertilizing salts, which it distributes to the central purchasing agencies, to be in 
turn distributed by them to the societies. The growth of this business since 1889, 
when the union first took it up, is shown in the following table, which gives the amount 
of kainit, one of the fertilizing salts principally used by German farmers, purchased in 
certain years, and the value of the same distributed to the central agencies in certain 
years: 1 


Year. 

Amount 

purchased. 

1889. 

Cwt. 

91,815 

1893. 

804,442 
1,598,189 
2,457,334 
5,058,006 
6,130,222 

1897. 

1902. 

1907. 

1909. 



Year. 

Value 

[distributed. 

1889. 

$1,329 

1892. 

16,403 
31,017 

1898 . 

1902. 

42,710 
72,228 
87,540 

1907. 

1909. 



The 27 central purchasing agencies purchase, for subsequent distribution to the 
societies, besides the kainit just mentioned, other fertilizers, fodder, seed, coal, 
agricultural machinery, and miscellaneous farm necessities. The amount of this 
business done in 1909 by all the agencies combined is shown in the following table: 


Article. 

Amount 

purchased. 

Value 

distributed. 

Fertilizers. 

Cwt. 

25,254,327 

8,881,163 

18,002,161 

227,965 

$13,493,828 
11,676,235 
2,347,248 
838,143 
642,038 
562,000 

Fodder. 

Coal. 

Seed. 

Agricultural implements. 

Miscellaneous . 

331,750 



At the close of 1909 the agencies enjoyed an aggregate membership of 10,384 societies 
and individuals. In carrying on their business they used accumulated capital of 
their own, amounting to $3,123,044, and outside capital amounting to $9,829,137, 
During 1908 and 1907 none of the agencies lost on the year’s business. In 1909 some 
losses were noted. On the w r hole, however, averaging losses and gains, a small general 
profit was realized in that year. 

The following table gives the main points in the business of the agencies over a 
period of years: 2 * 


Year. 

Number 

of 

agencies. 

Total 
value of 
purchases. 

Average 

profit 

realized. 

1892 . 

7 

$1,952,320 
4,160,638 
11,540,114 

Per cent. 
0.5 


16 

1.79 


22 

.93 


27 

50,849,172 

.81 





The foregoing statistics include the business done by the Imperial Union itself, as 
already shown separately above, but not that done by the goods department of the 
Central Agricultural Loan Bank. This institution purchased in 1909 for distribution 


i Jahrbueh des Reichsverbandes, 1910, pp. 38-93. 


2 Ibid., pp. 58-67. 















































24 


COOPERATION AND COST OF LIVING. 


to the societies $11,495,780 worth of fertilizers, fodder, machinery, etc. Its method of 
operation, so far as purchasing is concerned, is not essentially different than that of 
the central cooperative agencies. It also participated to some extent in cooperative 
selling. In 1909 it disposed of $5,235,000 worth of grain. 1 

The Central Agency for the Purchase of Machinery is a comparatively new institu¬ 
tion, having been founded in June, 1908. Its purpose is to act as what may be called a 
central agency for the central agencies, as well as for the societies, in the purchase of 
machinery. In 1909 it ccncluded contracts with more than 100 manufacturers, arranging 
for the purchase of machinery by the central agencies and societies at specified prices, 
delivery to be directly to the agency or society and payment to be made directly by it 
to the manufacturer. On the basis of these agreements $500,000 worth of implements 
and machinery were purchased. As, however, $1,500,000 worth of similar goods were 
purchased by the agencies and societies otherwise than through the new institution, 
the result of the year’s operation was not considered satisfactory. The continued 
existence of the Central Agency for the Purchase of Machinery is understood to depend 
on whether or not the 27 general purchasing agencies will be able to specify with more 
or less accuracy the amount of machinery needed by each for the ensuing year, so that 
definite contracts for the delivery on demand of certain quantities of machinery at 
certain prices may be made with the manufacturers. 2 

The Central Agency for the Building of Machinery, on the other hand, appears to be 
well established. At the close of 1909 it had completed during the year work to the 
total value of $171,480, and had on hand uncompleted work to the value of $97,746. 
The nature of the work done may be judged from the following jobs picked at random 
from the list of 10 on hand January 1, 1910: 

Grain elevator for the Westphalian Central Society in Munster, $2,700. 

Machinery installation at the warehouse of the Purchase and Sales Agencv in Zittau, 

$ 2 , 000 . 

Three cooperative electric power plants for the Schleswig-Holstein Central Agricul¬ 
tural Society, respectively, $8,000, $8,500, and $9,000. 

Most marked success seems to have been met with the construction of electric power 
plants of this last kind. 3 

In addition to carrying on the purchasing business described above, the central 
purchase and sales agencies, as their name indicates, engage also in the marketing 
for their members of grain and other farm products. All of them sell grain. The 
total amount put on the market in 1909 was 7,254,245 hundredweight, worth 
$15,558,133. Seven sold potatoes as well in 1909, the aggregate amount being 156,140 
hundredweight, worth $83,660. The agency at Munster, in Westphalia, also sells 
cattle for its members—to the value of $260,000 in 1909; and the Baden central agency 
at Karlsruhe sells eggs. 4 

The cooperative sale of other kinds of farm products is carried on, not through the 
central agencies, but in large part directly by the so-called agricultural products 
societies, which are in fact no more than selling mediums, the society as such not 
participating in production. Its operations are limited to assembling the products 
of the members (milk, cheese, distilled liquors and wine in bulk, and garden and 
orchard products are the most usual articles), preparing them for market, and selling 
them. In some instances the sale is in bulk to wholesalers; in other instances the 
products are retailed, some of the larger societies maintaining retail stores in various 
cities for the purpose. Consul Thompson, of Hanover, describes in his reports the 
methods of operation of an agricultural products and of an agricultural sales society. 

Turning to the industrial products societies, it is found that they may be sharply 
distinguished from the agricultural societies in that, in keeping with their name, they 
actually participate in production. The various businesses undertaken include bak¬ 
ing, printing, brewing, starch and sugar making, furniture and piano making, etc. 
On the whole, the industrial societies have not been so successful, nor are they at 
present nearly so numerous, as the agricultural societies. They appear to have 
encountered the largest measure of success in small undertakings requiring little cap¬ 
ital, as, for instance, baking, shoemaking, cabinetmaking, etc. One of the more pre¬ 
tentious societies was the North Star Berlin Innkeepers’ Brewery, started in 1907 with 
about 150 members. It went into bankruptcy the first part of the present month 
(March, 1912). During the five years of its existence it had accumulated a capital 
fund amounting to $18,000 and debts amounting to $200,000. 5 

The method of operation of an industrial raw-material society—the Shoemakers’ 
Raw Material Association of Bremen—is described in the report by Consul Fee. Con- 


1 Jahrbuch des Reichsverbandes, 1910, pp. 65-67. 

2 Ibid., p. 40. 

s Ibid., p. 39. 


* Ibid., p. 67. 

5 Berliner Tageblatt for Mar. 12,1912. 





COOPERATION AND COST OF LIVING. 25 

sul Teichmann, of Stettin, describes in his report the method of operation of an agri¬ 
cultural raw-material supply society. 

The work of a building association in Sorau is described in the report by the Amer¬ 
ican consular agent in that city. It will be noted that this society is not one which 
draws its membership from the working classes who are to occupy the houses built, 
but from among manufacturers who Rave adopted the cooperative form of organization 
in order to attain their common desire for a dependable and constant labor supply. 

Of quite another order, as will be noticed, is the Chemnitz building association, an 
account of which is given in the report by Vice Consul Brunswick. 

The purpose of the more usual form of building association is set down as the pur¬ 
chase or erection of dwellings for rent or sale to members. The necessary capital for 
carrying on this business is obtained from the entrance fees and stork subscriptions of 
members and the negotiation of loans on the credit of the society. Of any profit which 
may accrue a portion, usually at least 10 per cent, is diverted to a reserve fund, a 
portion if desired, into a benefit fund for the assistance of needy members, and the 
balance is distributed in dividends. Any loss is met first from the reserve fund. If 
this does not suffice, an assessment is laid on the members in the ratio of their stock¬ 
holdings. 

The methods of operation of an industrial work association of a rather unusual sort— 
the Victoria Transportation Association of Independent Boatmen—is described in the 
report prepared by Consul Spahr, of Breslau. More typical societies of this kind are 
the Tailors’ Work Association of Danzig, described in a report by the American con¬ 
sular agent in that city, and the Mountain Tallow Melting Society, described in Con¬ 
sul Eager’s report. The consul at Stuttgart has been asked to report on one of the 
agricultural work associations in his district. 

The Society for the Utilization of the Intestines of Slaughtered Animals, described 
in Consul Fee’s report, is an example of a combined raw-material supply and sales 
society of the industrial type. It will be noted that thi-s society not only sells for its 
members casings and other butchers’ by-products, but purchases for distribution to 
them butchers’ supplies of all kinds. The method of operation of a similar society of 
the agricultural type is described in the report of the consular agent at Konigsberg. 

In his report (F) on the Purchase and Sale Association of Breslau Grocers, Consul 
Spahr describes the operations of one of the largest and most important societies of 
this type in Germany. Another association of the same kind is described in Consul 
Busser’s report, dated March 16, 1912. These purchase societies, although not very 
numerous, are interesting in that they fulfill for retail dealers the same service that 
consumers’ societies perform for consumers. They represent the carrying of the idea 
of the consumers’ society one step further back in the scheme of distribution. 

The discussion of the methods of operation of the consumers’ societies has been 
postponed to this point, as the business of these associations deserves rather particu¬ 
lar attention. The same general principles of operation are common to all of them, 
although their more particular methods of doing business vary accordingly as they 
belong to the first or second group of societies, as distinguished at the outset of this 
report, and within the first group accordingly as they adhere to the General or Central 
Union. The methods of a consumers’ society which belongs to the Central Union— 
the Cooperative Consumers’ and Savings Association of Plauen—are described in 
Consul Mosher’s report of March 2, 1912. Those of a society adhering to the General 
Union—and, by the way, the largest consumers’ society in Germany—are given in 
detail in Consul Spahr’s report of March 15, 1912. 

In general, the consumers’ societies belonging to the General Union seek, like all 
other societies of this kind, to purchase directly from the original source of supply of 
the goods desired. The extent to which this is actually done depends on the size and 
location of the society and the kind of goods purchased. Not infrequently arrange¬ 
ments are made whereby consumers’ societies buy goods directly from cooperative 
sales and products societies, especially agricultural societies. 

The organization of a central purchasing agency, similar to that which is maintained 
at Hamburg by the consumers’ societies of the Central Union, has frequently been 
discussed in the meetings of the General Union. Several such agencies have, indeed, 
been actually set going, but none has survived. Purchase associations made up of a 
comparatively small number of societies situated within a limited area are, however, 
rather numerous. Many of the smaller societies also support so-called exchange 
days, which are not unlike fairs. They are held periodically at central points and 
the consumers’ societies, especially the smaller ones, within a limited distance around, 
as well as storekeepers who take orders to supply members of consumers’ societies, 
send representatives. Purchases are made largely of staple articles, and, as buyers 
for small societies often combine to purchase in quantity, many of the advantages 
attending central agency buying are obtained. 


26 


COOPERATION AND COST OP LIVING. 


It is the aim of the consumers’ societies of the General Union, in common with all 
other societies, to pay cash for goods purchased, thus realizing on all discounts. This 
is in large measure actually accomplished. During 1910 the combined purchases of 
271 consumers’ societies belonging to the General Union amounted to $16,688,000. 
At the close of the year the societies owed altogether but $136,455, or less than 1 
per cent on the total investment. Of these 271 societies, 23 were engaged in produc¬ 
tion on their own account and had sold during the year $767,795 worth of goods so pro¬ 
duced. 1 

Independent production is carried on most extensively among the consumers’ so¬ 
cieties of the Central Union. During 1909, 1,077 of them sold $10,658,802 worth of 
goods so produced, and in 1910, 1,109 sold $12,546,724 worth. 2 

The societies of the Central Union also support purchase associations similar to 
those of the General Union. At the close of 1910 there were 47 of them maintained 
by 220 societies. During 1910 they held among them 338 exchange days, and during 
the course of that year did an aggregate business of $69,756,137 on their own accounts 
and of $19,271,852 on account of the Wholesale Purchasing Company for German 
Consumers’ Societies. 3 

The Wholesale Purchasing Company for German Consumers’ Societies has its 
headquarters in Hamburg and maintains branch establishments in Erfurt, Chemnitz, 
Berlin, Dusseldorf, and Mannheim. It is organized as a limited liability company, 
and its stock is held among the societies which purchase from it. At the end of 1909 
they numbered 1,554, of which 675 were stockholders, the individual holdings rang¬ 
ing in amount from $120 to $35,000. The total purchases made by these societies 
reached $21,103,376, the amounts in individual cases ranging from a few hundred 
dollars to $731,000. The profit realized on the year’s business was $241,750. 4 

The company deals chiefly in staple, nonperishable food products. It buys so far 
as possible from original producers. Special preference is given to sales and products 
cooperative societies, both foreign and domestic. In 1910 goods to the value of 
$857,000 were purchased from such sources. 5 

Recently the company has gone into production on its own account. It maintains 
cigar factories at Frankenberg, Hamburg, and Hockheim, which turned out 30,113 
thousands of cigars in 1910. A soap factory started at Groba-Riese in Saxony some¬ 
what more than a year ago turned out 6,380,000 pounds of soap worth $325,500 dur¬ 
ing the first six months of operation. 6 The consul general at Dresden has prepared a 
report on this enterprise. The establishment of a match factory is now under con¬ 
sideration . 

The purchasing methods of the consumers’ societies not affiliated with any of the 
central unions, that is, those of the second group, are chiefly distinguished by the 
absence of joint effort. Each society enters the market as an individual. 

It is the usual rule with these societies to purchase as nearly as possible to the original 
source of supply. In the case of domestic products business is done frequently with 
the actual producer. In the case of articles of foreign origin, some societies content 
themselves with buying from the large importing houses at Hamburg and Bremen, 
while others aim to buy directly from the country of origin. It is a rule of the Army 
and Navy House, which the German Officers’ Society maintains in Berlin, to eliminate 
all agents from the buying chain. It buys domestic articles directly from the manu¬ 
facturer and foreign articles only from branch houses (not agencies) located in Berlin. 

Many of the smaller societies can not, of course, deal on so large a scale. They are 
often forced to buy in the regular wholesale market exactly as do the retail merchants 
with whom they compete. They put their chief reliance on the possession of a suf¬ 
ficient capital to permit them to buy in quantity at the best turn of the market. 

The distributive methods of the consumers’ societies are rather more sharply defined 
than their purchasing methods. The union societies, or the societies of the first group, 
practically all maintain stores. They take orders from their members to be filled 
by the private dealers only in case of unusual goods or goods which they do not find 
it profitable to carry themselves. During 1910 the 271 consumers’ societies of the 
General Union, already cited, sold goods in their own stores to the amount of $16,688,- 
099. and goods to be furnished by other dealers to the amount of $765,367. 7 

It is also characteristic of these societies that they maintain many branch stores, 
in different parts of the same city or in neighboring cities. This custom is attributable 
to the fact that it is not the practice to deliver goods to members or, as a rule, to receive 


1 Jahrbuch des Ailgemeinen Verbandes, 1910, p. 183. . 

2 Jahrbuch des Zentralverbandes, 1911, Vol. I, p. 356. 

a Ibid., p. 451. 

* Grosseinkaufs Gesellschaft, Bericht uber das 17. Geschafts jahr, pp. 9 and 39. 

s Ibid., p. 22. 

6 Ibid., pp. 23-28. 

7 Jahrbuch des Ailgemeinen Verbandes, 1910, p. 184. 



COOPERATION AND COST OF LIVING. 


27 


orders by mail or telephone. The member, or some one of his family, or other repre¬ 
sentative, is expected to appear at the store with the passbook. The purchase made 
is paid-for in cash, the date and amount of the purchase noted in the passbook, and 
the articles carried away by the purchaser. 

The societies of the second group, on the other hand, usually maintain a central 
store, if any at all. The German Officers’ Society of Berlin has such in its Army and 
Navy House. The building contains display or sales rooms arranged after the fashion 
of a department store. In these are shown a part of the goods offered. In addition, 
a catalogue is published periodically. The most recent one is of quarto size and 
contains 225 pages. Goods may be ordered out of this by mail or telephone, or may 
be selected personally out of stock. In all cases, where desired, they are delivered. 
Furthermore, credit is granted up to certain sums, the amount varying with the 
rank of the officer. 

The rebate, or purchase-dividend, system is not used at the Army and Navy House. 
The benefit of purchase there, it is said, consists in cheaper prices, or, as the manage¬ 
ment puts it, the rebates are paid at the time of purchase. 

The Household Society of Hanover, an organization similar to the German Officers’ 
Society, also maintains but one central store. It receives orders by mail or telephone, 
and delivers the desired goods in autos without extra charge. 

The methods of operation of the consumers’ societies which maintain no stores are, 
in the main, of two kinds. Under one system, the member on making a purchase 
at one of the designated private stores pays the regular price. The purchase is, 
however, noted in his passbook and the agreed rebate is paid by the dealer to the 
central office of the society. There it is credited to the member, and at the end of the 
year the accumulated rebates are paid to him by the society, minus his share of the 
cost of administration. Under the other system, the member, on showing his pass¬ 
book to the dealer from whom he is purchasing, received his full rebate on the spot. 
The cost of administering.a society of this kind is usually met by yearly voluntary 
subscriptions on the part of the members. Each member is expected to give some¬ 
thing and the sums, it is understood, are in no cases large. The organization of a 
society of this type is usually very loose. 

V. 

RELATIONS OF COOPERATIVE SOCIETIES WITH PEOPLE AND STATE. 

Public opinion in the matter of the cooperative movement has varied at different 
times, in different quarters, and with reference to different types of societies. At 
the outset, such organizations being an innovation, opposition on the part of the 
conservative elements of the population was general. Later, as the movement crys¬ 
tallized and distinct types of societies appeared, general skepticism gave away to 
more particularized feeling—hostile, friendly, or indifferent—emanating from definite 
quarters and directed toward special types of societies. 

Credit and loan associations at first fell under the general condemnation because, 
among other things, they were considered superfluous. When it was found that 
they were not in competition with any then existing banks, but were, as a matter of 
fact, creating new business from which the larger private institutions, acting as inter- 
mediiries between them and the general money market benefited, the value of such 
a supplement to the banking system of the country was recognized and opinion amel¬ 
iorated. 

Consumers’ .societies, on the other hand, it was discovered, came noticeably into 
competition with private enterprises. Immediately a very particularized feeling of 
hostility grew up against them, emanating, of course, from dealers and other middle¬ 
men. As raw material supply societies, both industrial and agricultural, purchase 
societies and building associations in time came into existence, a similar feeling of 
antagonism was manifest against them by the middlemen, whose profits they aimed 
to cut down, or altogether eliminate. 

At present some differentiation may be distinguished in the attitude of the middle¬ 
men. The feeling of the small dealers against the consumers’ societies is possibly less 
bitter owing, in part, to the adoption of cooperative methods by the small dealers them¬ 
selves (purchase societies), and in part to the coming of department stores, against 
which some portion of their ill-feeling has been diverted. 

On the whole, however, the attitude of the middle-men is uniformly hostile, and what 
would appear to be an active and carefully directed campaign goes on unceasingly, 
especially against the consumers’ societies. Building associations and raw material 
supply and purchase societies have not yet attained sufficient numerical proportions 


28 


COOPERATION AND COST OF LIVING. 


to excite more than spasmodic opposition. In the case of the building associations 
and the purchase societies, the hostility of the affected house owners and wholesale 
dealers has been restricted to polemic resolutions adopted at the general meetings of 
their respective organizations. In the case of the raw material supply societies a 
more effective weapon has been found by the dealers who feel or anticipate the ill 
effects of their competition. This is the threatened withdrawal of credit from the 
projectors of such societies. For example, some 60 memb 3rs of a Berlin artisans’ guild 
at one time laid plans for the cooperative purchase of their raw material through the 
medium of a raw material supply society. The dealers from whom they were then 
purchasing, getting wind of the project, gave notice to its projectors that, should they 
continue with it, credit would be denied to them in the future. The project was 
immediately abandoned. 1 

The campaign against the consumers’ societies has been waged chiefly with the 
weapon of adverse legislation. 2 The middle-men have addressed, themselves to the 
Imperial and other governments through the medium of their organizations, especially 
through the chambers of commerce, and their petitions have in some measure been 
answered. The attitude of the State has, indeed, been a reflection of the more insist¬ 
ent section of public opinion tempered somewhat by conservatism and consideration 
of public policy. 

In the case of the agricultural societies the presence of this tempering influence has 
been quite noticeable. The subsidies granted during the eighties and early nineties 
and the establishment of the Prussian Central Bank for Cooperative Societies in 1895, 
measures enacted by the predominant agrarian party, are evidences of it. They were 
put through, in the case of the subsidy bills, at least, in the face of considerable popular 
opposition arising from middle-class hostility to the agricultural raw material supply 
and similar associations. 3 

No such shield has existed for the consumers' societies. They have been protected 
from the adverse activity of their opponents only by the efforts of their own officers 
and the sense of justice of legislatures. The earliest piece of legislation directed 
against them was that section of the law of 1889 which forbade their selling to non¬ 
members. Although many other restrictive measures have been urged upon the 
Imperial Parliament, this with the amendment of 1896, which strengthened it, makes 
up the total Imperial legislation of importance.. The legislatures of the several 
federal states, however, have enacted innumerable statutes dealing with consumers’ 
societies. Most of them have to do with taxation. They are, however, so many and 
so varied that it is impossible to go over them in detail. The more important are 
the department store tax enacted by Prussia, the communal business tax of Saxony, 
the special business taxes of Gotha and Lubeck, and the sales taxes of Bavaria, Hesse, 
and Alsace-Lorraine. 3 

An account of the existing taxes in Prussia and of a new tax which it is now proposed 
to lay is given under the heading, ‘ ‘ Legislation Adversely Affecting Consumers’ 
Associations,” in Consul Busser’s report dated March 16, 1912. This report also shows 
the effect which the so-called department store tax has had on the character of the 
business carried on by the consumers’ societies. 

The consumers’ societies regard their tax burdens as onerous. The following is 
translated from the 1910 report of the general secretary of the Central Union: 4 

“The tax statistics of Prussia show what a cruel load the ‘insufficient taxation of 
the consumers’ societies’ has grown to be. In 1908 there were 846 consumers’ socie¬ 
ties in Prussia paying a total income tax of 385,235 marks ($91,586); in 1909 there 
were 880 of them paying an income tax which had already grown to 485,095 marks 
{$115,453). Considering the whole Empire, the societies affiliated with the Central 
Union in 1909 paid taxes in the aggregate sum of 2,364,680 marks ($562,794) as against 
2,103,639 marks ($500,666) in 1908. Even here an absolute increase is to be noted. 
The taxes paid in 1909 amounted per member to 2.26 marks (54 cents); in 1908 to 
2.18 marks (52 cents).” 

At the end of the fiscal year 1910-11, 276 consumers’ societies adhering to the Gen¬ 
eral Union made returns of the taxes paid by them. 5 The great majority (210) of 
the societies were situated in Prussia; but as the others were scattered throughout 
the other States the returns give a fair idea of the general situation. 

The aggregate gross receipts of all the societies amounted to $2,990,005 and the 
net profits to $1,729,575. The aggregate amount of taxes paid was $221,485. This 


1 Criiger: Aus der Vergangenheit und Gegenwart, etc., p. 53. 

2 For discussion of the grounds on which the consumers’ societies have been attacked see Criiger: Zur 
Kritik der Agitation gegen die Konsumvereine. 

3 Criiger: Aus Vergangenheit und Gegenwart der deutschen Genossenschaften. p. 23. 

4 Jahrbuch des Zentralverbandes, 1911, Vol. I, p. 197. 

5 Jahrbuch des Allgemeinen Verbandes, 1910, p. xxvm. 



COOPERATION AND COST OP LIVING. 29 

was 7.4 per cent of the gross receipts and 12.8 per cent of the net profits. The taxes 

paid in Prussia were as follows: 

State tax. $57,494 

Communal tax. 116,907 

County and provincial taxes. 1,236 

School and church taxes. 131 

Sumptuary taxes. 4,158 

Department-store tax. 7,864 

Miscellaneous taxes. 321 


Total.. 188,112 


The taxes paid by the 66 societies situated in the other States were distributed in 
about the same proportions, except that in none of the other States is there a depart¬ 
ment-store tax applying to consumers’ societies. 

In considering the complaint of the consumers’ societies against this taxation it 
must be borne in mind that the taxes are all of general application and that the 
stores with which the societies compete are equally subject to them. A new tax 
law now pending before the Prussian Parliament proposes to tax the rebates paid 
by the societies to their members. This, if passed, would, I understand, be the 
first instance of a tax applying solely to cooperative organizations. 

The attitude which the cooperative societies have assumed toward the middlemen 
has been of two kinds. At the annual meeting of the International Cooperative 
Alliance, held at Budapest in 1904, the general aims of the cooperative movement 
being under discussion, one speaker, who subsequently carried the day, “laid empha¬ 
sis on the fact that in all cooperative efforts the problem involved was the organiza¬ 
tion of a nation’s power of consumption in order to eliminate the profits of capitalistic 
trading and to do away with the economic tribute which presses so heavily on the 
mass of the population under our present economic system.” 1 Dr. Cruger replied: 
“I must beg to be allowed to state, on behalf of the distributive societies of the 
General Cooperative Union in Germany, with which I am connected, that they do 
not by any means subscribe to the principle set up that the task and object of cooper¬ 
ation is to organize consumers wholesale in avowed opposition to what is called the 
capitalistic trading system now established * * *. We do not look on the distribu¬ 
tive societies as a means of replacing the existing economic order, but as something 
which supplements the existing order * * *. I should like to go further and say 
that it is an absolute mistake to represent trade as an obstacle to us as cooperators. 
Our desire is that cooperation should take its proper place in national trade. ’ ’ The rep¬ 
resentative of the German agricultural societies, which were also at this time quite gen¬ 
erally affiliated with the International Alliance, seconded Dr. Cruger by saying: “We 
have, in Germany, a commercial and industrial middle class representing a very 
large number of independent citizens, and these people can not really be accused 
wholesale of unfairly exploiting their customers. We recognize the importance of 
maintaining the middle class, and accordingly we avoid carrying cooperative prac¬ 
tices to extreme lengths by encouraging the formation of societies which must almost 
necessarily prejudice the interests of that class, and possibly extinguish it altogether, 
at any rate until we are compelled to do so by necessity.” 2 The societies of the 
Gene'al and Imperial Unions have subsequently held to the ideas thus expressed. 
The societies of the Central Union, on the other hand, have remained faithful to the 
International Cooperative Alliance, and the antimiddle-class views, which enun¬ 
ciated at Budapest, have now become a policy. 

A similar divergence is to be noted in the reciprocal attitude of the cooperative 
societies toward the State. It has already been touched upon somewhat in the account 
of the historical development of the societies given earlier in this report. The Raif¬ 
feisen societies, having been the beneficiaries of the State in the matter of subsidies, 
have on the whole courted Government aid. The Prussian Central Bank for Coopera¬ 
tive Societies and the intimate, although at present slightly strained, relations existing 
between it and the Raiffeisen loan associations in Prussia are evidence of this. The 
Raiffeisen leaders do not, however, entertain socialistic views of the responsibilities 
of the State, as witness the conduct of their representative in the meeting of the Inter¬ 
national Cooperative Alliance, just described. They do not, however, appear to con¬ 
sider a mild paternalism inconsistent with the healthy development of the cooperative 
movement. The leaders of the Schulze-Delitzsch societies, on the other hand, have 
consistently fought State interference of all kinds. In 1865 the Prussian Government 


1 Muller: The Historical Development of the International Cooperative Movement, p. 86. 

2 Ibid., pp. 87-88. 













30 


COOPERATION AND COST OF LIVING. 


called together a commission of employers and employees to discuss certain questions 
involving cooperative societies and State aid. The Schulze-Delitzsch societies gath¬ 
ered in convention at Stettin resolved: 1 2 

“All attempts on the part of Governments to assist self-sustaining cooperative socie¬ 
ties, in general or in particular, through a positive interference in their affairs must be 
repudiated as pernicious.” 

This independent attitude has been unswervingly adhered to. The very title of 
the General Union—General Union of German Industrial and Economic Cooperative 
Societies founded on self-help—is a constant reminder of it. 

The relations of the State with the officials’ societies, or societies of the second group, 
are peculiar, owing to the fact that the relation of employer and employee exists between 
the State and many of the individual members. The attitude of these societies toward 
the State is, on this account, quite negative. The State, on the other hand, owing to 
the more direct control which it might exercise over the societies through disciplinary 
measures affecting the majority of the members, has been especially importuned by 
middle-class interests to suppress cooperative organizations of this kind. As has been 
shown, the very existence of these organizations is in a measure due to restrictions 
imposed upon officials with reference to membership in the regular consumers’ socie¬ 
ties. In its 1910 session, the Imperial Parliment received and discussed several peti¬ 
tions submitted by organizations of middle men asking for legislation on the subject 
of the officials’ societies. Similar petitions were laid before the Prussian Parliament. 
The opinion prevailed in both bodies, however, that the freedom of Government serv¬ 
ants to act as they please in matters of domestic economy should not be restricted. 3 

A petition, which was presented to the Imperial Parliament by the Central Associa¬ 
tion of German Bakers’ Guilds and after discussion referred by it to the Imperial Chan¬ 
cellor “as material,” is so excellent a reflection of the attitude of the middle classes 
toward consumers’ societies of all kinds that it is here given in full: 3 

“1. That officials of both the Imperial and State Governments who receive remu¬ 
neration of any kind be forbidden to actively participate in the business affairs of con¬ 
sumers’ societies; and that it be suggested to officials receiving a yearly stipend of 
M 2,000 ($476) or more that they altogether withdraw from membership in the con¬ 
sumers’ societies. 

“2. That the consumers’ societies which deal in food and household necessities be 
taxed like any other person carrying on a mercantile business, and that a business tax 
such as that laid on department stores be also collected from them. 

“3. That the cooperative societies law be amended so as to prohibit consumers’ 
societies from selling liquor or spirits and from declaring a yearly dividend of more 
than 2 per cent. 

“4. That, in connection with the awaited general increase in the salaries of Gov¬ 
ernment officials, to which the petitioners lend their hearty approval, the existing 
officials’ societies be ordered to dissolve and the formation of new ones be forbidden 
because, as these societies are inimical to the interests of the other tax-paying sections 
of the middle classes, their suppression would increase the tax-paying power of the same 
and thus benefit both the State and its servants. 

“5. That, in the case of consumers’ societies which maintain cooperative bakeries 
(that is, cooperative products societies engaged in baking) the sale of the bakery prod¬ 
ucts to nonmembers be permitted only in special rooms, set off from those in which 
other wares are sold, and having special entrances.” 4 

VI. 

THE ECONOMIC IMPORTANCE OP COOPERATIVE SOCIETIES AND THEIR EFFECT ON THE 

COST OF LIVING. 

As between the two chief fields of economic endeavor, agriculture and industry, it 
is in agriculture that cooperation has attained its most widespread development and 
as among the several types of agricultural societies it is the loan associations which are 
foremost. As the credit resource of the small farmer they probably occup\^ an even 
more influential position than the “country banks” of the United States, and as one 
of the chief purveyors of the farmers’ prime necessities “fertilizers, fodder, and seed,” 
they are otherwise intimately connected with the success of his agricultural operations. 


1 Criiger: Aus Vergangenheit und Gegenwart der deutschen Genossenschaften, p. 7 

2 See Jahrbuch des Allgemeinen Verbandes, 1910, pp. xix to xxi, and Jahrbuch des Zentralverbandes 
1911, Vol. I, pp. 160-162, 188-196. 

3 Jahrbuch des Allgemeinen Verbandes, 1910, p. xx. 

4 For a full discussion of the relations existing between the consumers’ societies and the State and people, 
written from the cooperative societies’ point of view, see Jahrbuch des Zentralverbandes, 1911, Vol I nn 

AfL OOA 7 7 ' 




COOPERATION AND COST OF LIVING. 


31 


Hardly less remarkable are the agricultural purchase and sales associations, such as 
the raw material supply and products societies. Their importance lies in the bearing 
which their operations have on the prices which the farmers pay for their raw materials 
and the prices at which the farmers’ products are offered to the consumer. 

In the industrial branch of the cooperative movement it is probably the consumers’ 
societies and the somewhat similar purchase societies of the retail dealers which enjoy 
the highest economic importance. It is they which, owing to the nature of their 
operations, would seem to exert the mod direct influence on the cost of living. The 
building associations and raw material supply societies, which may in the future come 
to exert a considerable influence, are not at pro cut very noticeable factors in the 
lives of the people, owing to their comparatively small numbers. The industrial 
credit societies are of importance, but can hardly be compared in this respect with 
those supported by the farmers. 

Considered as a whole, the importance of cooperative organization in the economic 
life of Germany can scarcely he overestimated. It is the subject of a considerable 
literature, both periodical and occasional, and to the study of its various phases the 
work of not a few prominent German students of economy is in part devoted. The 
University of Halle has created a special seminar on cooperation, and lecture courses 
on the subject are given in a number of the other higher institutions of learning. The 
development of the movement yearly engages the serious attention of legislatures, 
where the problem of its legal regulation is fought out under the leadership of some 
of the best business and legal talent in the Empire. Five million adults are embraced 
in the membership of the various societies, and probably an equally large, if not 
larger, section of the population is otherwise directly or indirectly interested in the 
business which the societies carry on. 

In considering the influence which the movement may have on the cost of living 
it is necessary to first differentiate two types of cooperative organization. First come 
the credit societies. These institutions afford the means, not so much of obtaining a 
commodity at less cost than it could otherwise be had, but of obtaining a commodity 
which could not otherwise be had at all. The primary purpose of a cooperative credit 
society is to enable small farmers and artisans, who could not themselves give the 
necessary guarantees to individually secuie loans from the larger private institutions, 
to borrow on their combined credit money, which they can in turn lend to themselves. 1 
In other words, their aim is not to cut down or eliminate the profit of middlemen, but 
rather to create by their own incorporation a middleman between them and the 
money market. Building associations, which in one way or another enable their 
members to acquire ownership in dwellings, are indistinguishable from the credit 
societies in this regard. Those which only rent dwellings to their members are anal¬ 
ogous to consumers’ societies. 

In thus affording the means by which the necessities of life may be obtained or by 
which life’s work may be more advantageously carried on, societies of this first group 
must in some degree operate to reduce the cost of living. The effect is so indirect 
and in specific ca^es so problematic that any attempt to definitely estimate it would, 
however, probably be more misleading than enlightening. 

The societies of the second group, in contradistinction to those of the first, do not 
seek to create middlemen, but rather to eliminate tham. On the one hand are the 
products and other sales societies, the members of which being producers aim by 
eliminating the middlemen to themselves act not only as producer but also as dis¬ 
tributor, and thus realize on two increments. On the other hand are the raw material 
supply, purchase, and consumers’ societies, the members of which being consumers 
aim by eliminating the middlemen to become not only the consumers but the dis¬ 
tributors also. The extent to which they can perform the duties of distributor or 
middleman more economically than those who make it their business is, of course, the 
measure of the extent to which they are capable of reducing the cost of living. 

In the case of the consumers’ and other distributive societies, the first question 
which presents itself is: Can they purchase their goods as advantageously as their com¬ 
petitors? The question is, of course, not susceptible of categorical answer. There are 
two considerations, however, which go strongly to confirm the belief that at least an 
equality exists in this regard: First, the extensive central purchasing machinery set¬ 
up and successfully maintained by the cooperative societies, giving them all the 
advantages of large scale buying, and, second, the fact that many retailers, especially 
the grocers, have adopted cooperative methods of purchasing, the rapid organization 
of the so-called purchase societies among those dealers, already adverted to, being 
evidence of the extent of the movement. 


i See interviews on the Banking Systems of England, Germany, etc., pp. 452-469. 




32 


COOPERATION AND COST OF LIVING. 


If buying is carried on on at least an equal footing, the next point is: How do the 
respective expenditures made in connection with retailing the goods compare? The 
average cost of administration for 1,946 milk-vending societies, as reported to the 
Imperial Union in 1909, 1 was 9.5 per cent of the total value of the milk sold. The 
average cost of administration for 2,081 agricultural purchase societies of one kind or 
another, as al§o reported to the Imperial Union in 1909, 2 3 was 2.6 per cent of the total 
value of the goods purchased. A similar average for 271 consumers’ societies, reporting 
to the General Union in 1910, a was 4.3 per cent of the total value of the business done. 
It has not been possible to ascertain just what items have been included in the “cost 
of administration,” but there is no reason to believe that the amount has been shaded 
by the omission of charges which should properly have been included. 

To the cost of administration must be added profits, for, as a rule, these are not fore¬ 
gone by the cooperative societies. Some of the societies aim to keep them at a mini¬ 
mum. Capital dividends regularly amounting to no more than a fraction of 1 per cent 
are not uncommon. Some societies, few in number, having really lost their cooper¬ 
ative character and become purely private enterprises, on the other hand, pay divi¬ 
dends running up to 12 and 15 per cent. The average dividend is in the neighborhood 
of 4 per cent. 4 5 

It is probable that no storekeeper adds less than 20 per cent to the wholesale value 
of his goods to cover cost of administration and his own profit. Allowing 7 per 
cent as a fair average for the cost of administration among cooperative societies and 
adding to this 4 per cent for profits, it would appear that on the average the societies 
perform the duty of middleman somewhat more economically than those who under¬ 
take it privately. On general grounds it would appear that this should be the case. 
Cooperative societies do not advertise, and, as a rule, they maintain only the plainest 
stores and equipment. Furthermore, by far the greater number of consumers’ socie¬ 
ties do not deliver goods, and they exact cash payment. The saving realized in these 
particulars would seem to more than offset economies effected in private enterprise 
through the more direct personal interest of the merchant. 

If it is granted, on the basis of the foregoing, that cooperative organization affords 
a means of bringing about a reduction in the cost of living, the'question remains: Do 
the existing cooperative organizations actually effect such a reduction? The con¬ 
sumers’ societies afford the most promising field of inquiry, but even among them 
tangible facts on which to rest definite conclusions are hardly to be found. Dr. Hans 
Cruger, attorney of the General Union, undertook an inquiry of this sort in 1889. He 
reached a general conclusion that the existence of the societies had some influence on 
prices, but that was about all. 6 So far as it has been possible to ascertain, no inquiry 
of this nature has since been attempted l and it is probably impossible to arrive at any 
statistical or otherwise scientific conclusions as to the relation existing between the 
prices asked in private stores and in the stores of the consumers’ societies. 

In some instances the societies claim to sell as much as 16 per cent lower than their 
competitors; 6 in other instances, they do not pretend to undersell them at all. 7 In 
these latter cases, however, when it is the practice to allow periodical rebates or 
dividends on goods purchased, it is universally insisted that the amount of the rebate 
is clear gain. In the case of societies maintaining their own stores, the amount of the 
rebates averages about 6 per cent; 8 in the case of societies having no stores, but arrang¬ 
ing for the sale of goods to members by private merchants, about 10 percent. 9 This 
does not mean, however, that the latter class of societies save their members more 
money, as the prices on which the 6 and 10 per cent rebates are based are probably 
different. 

Opponents of the societies deny that they sell at lower prices than their competitors 
and assert that the rebates which are paid either accounted for by higher prices 
originally charged or offset by entrance fees and annual dues. Annual dues are 
unusual, and entrance fees are not, as a rule, large. In some cases they are as high as 
M 20 ($4.76), but in others they are as low as 10 pfennings (2.38 cents). 10 Conclusive 
figures to disprove the allegations of the tradesmen are as unobtainable, however, as 
proofs to sustain the contention of the consumers’ societies that they sell on the average 
at lower prices. 


1 Jahrbuch des Reichsverbandes, 1910, p. 554. 

2 Ibid., p. 495. 

3 Jahrbuch des Allgemeinen Verbandes, 1910, p. 184. 

4 See Jahrbuch des Zentralverbandes, 1911, Vol. II, pp. 854 to 957. 

5 Mitteilungen uber den 53. Allgemeinen Genossenschafstag des Allgemeinen Verbandes, 1911, p. 190. 

6 See Consul Busser’s report of Mar. 12,1912. 

7 Mitteilungen, etc., p. 188. 

8 See Jahrbuch des Zentralverbandes, 1911, Vol. II, pp. 854 to 957. 

9 See rebate lists published by societies. 

10 Jahrbuch des Zentralverbandes, 1911, Vol. II, p. 856. 




COOPERATION AND COST OF LIVING. 33 

Consumers’ societies claim to offer better quality goods. The tradesmen flatly 
deny it. Both are again at a loss to conclusively prove their contentions. 

The whole question of relative merit, either in regard to prices or quality, is, in fact, 
a jumble of ex parte statements, and it seems hopeless to attempt to reach by inductive 
reasoning any conclusion as to the effect which cooperative societies exert on the cost 
of living. 

Considering the whole situation a priori, however, a defensible conclusion seems 
attainable. The conclusion is that cooperative societies do actually save money for 
their members. This is based on the wide and increasing support which the people 
lend to them. The adherence of more than 5,000,000 people of various stations in life 
to associations to the maintenance of which time and money must in many cases be 
devoted is not to be explained away on noneconomic grounds. It is true that the 
Raiffeisen societies give attention to social and sometimes religious affairs, 1 and that the 
Central Union recommends to its affiliated societies that they establish reading rooms 
and libraries, and pay more attention than at present to the development of mutual 
benefit and insurance departments. 2 In the case of Raiffeisen societies this phase of 
their work is undoubtedly of importance, and may account in some measure for their 
spread. In the case of the other societies, however, except a few which have been 
formed for political reasons, their rapid and continued growth can not reasonably be 
ascribed to any other main cause than a conviction on the part of a large section of 
the population, gained by actual experience, that the societies bestow a tangible 
economic benefit in the way of a reduction in the cost of living. It may he added 
that in every quarter in which inquiries have been made this is regarded as a fact so 
self-evident as to be beyond discussion. 

It is interesting to note that the benefit which the societies, especially the con¬ 
sumers’ societies, would thus seem to bestow, is not confined to the membership of the 
societies, but through the operation of competition has extended itself to the public 
in general. Herr Maucher, a director of the Karlsruhe Consumers’ Society, speaking 
before the last annual meeting of the General Union, said: 3 

“We can set it down as an incontestible fact that wherever a well-conducted con¬ 
sumers’ society exists its presence in the community is deeply felt and its mere exist¬ 
ence is of beneficial effect. I believe that this fact is not as a general rule fully recog¬ 
nized, nor is it always made sufficiently clear to consumers.” 

Speaking of the experience of his own society as bearing on this subject he continued: 

' ‘ One of the chief articles of consumption is, of course, bread. The quality of it in 
different places varies so much, however, that it is impossible to make comparisons in 
the matter of price. In Karlsruhe we have for years maintained the same prices as 
the local bakers’ union, a course which we can well justify as long as the prices are 
kept within reasonable limits. In 1906 the bakers’ union made us a proposition to 
stop baking the 3-pfennig rolls and to substitute a 5-pfennig article. In spite of the 
fact that the proposal may have had some justification in the advancing price of flour, 
we would not entertain it, basing our action on the expectation that a more favorable 
flour market would in time be realized. We thus performed a great service for the 
entire population of Karlsruhe. When the octroi duties were removed on April 1 of 
the present year, the bakers’ union showed no disposition to let the consumers have 
the benefit, not even in the face of the reduction in flour prices which occurred at that 
time. But we lowered the price independently of them and they were forced to 
follow suit. 

“I can also relate out of my own experience how, when on the heels of the bad 
vintages of the last few years an enormous advance occurred in the price of wine, it 
was possible for us on account of supplies on hand left from previous bountiful years 
to sell good pure wine at properly reduced prices without reference to the wholesale 
prices then prevailing. We were thus able to keep the prices for wine in Karlsruhe 
within reasonable limits. A wine merchants’ association was formed at the time for 
the purpose of ‘regulating the prices of wine.’ Even we were invited to join it—of 
course, without results. 

“And so I could go on picking out examples, but I think that experience has been 
the same everywhere, and that all our societies can without exaggeration confirm my 
statement that it is possible for them to exercise a marked influence on prices.” 

While this is an ex parte statement, the point which it develops is manifestly cor¬ 
rect. In reducing the prices at which their own members may purchase the necessi¬ 
ties of life, the societies, being for the most part of unlimited membership, force their 
competitors to in some degree do likewise. Actual reductions are probably few, but 
the instances in which dealers have refrained from making advances out of deference 


iSee “Ueber das Soziale Works einer Raiffeisen-Kasse” and similar publications of the Imperial Union. 

2 Jahrbuch des Zentralverbandes 1911, Vol. I, pp. 298-306. 

3 Mitteilungen Uber den 52, Allgemeinen Genossenschaftstag des Allgemeinen Verbandes, 1911, p. 188. 

H. Doc. 833, 62-2-3 



34 


COOPERATION AND COST OF LIVING. 


to comparative competition are probably many. The cooperative society, in short, is 
a hostile element in the community of purveyors and an effective hindrance to the 
consummation of price agreements. 

While it has been possible by the foregoing backward reasoning to conclude with 
some degree of satisfaction that cooperative distributive societies actually save money 
for their members and moderate in some measure the cost of living for the community 
at large, to attempt to estimate the magnitude of this benefit, as by naming a definite 
percentage of saving, would be utterly impracticable, except possibly as the result of 
a long-continued and expensive investigation of concrete instances. 

A. M. Thackara, 
American Consul General. 


GLOSSARY CONTAINING ORIGINAL GERMAN TERMS FOR ENGLISH EQUIVALENTS USED 

IN REPORT. 

Army and Navy House, Armeemarinehaus. 

Attorney (of a central union), Anwalt. 

Audit Union, Revisionsverband. 

Bank Employees’ Society, Bankbeamtenverein. 

Board of managers, Vorstand. 

Board of supervisors, Aufsichrat. 

Breeding association, Zuchtgenossenschaft. 

Building association, Baugenossenschaft. 

Central Agency for the Building of Machinery, Maschinenbauzentrale. 

Central Agency for the Purchase of Machinery, Maschineneinkaufszentrale. 

Central Agricultural Loan Bank, Landwirtschaftlichs Zentraldarlehnskasse. 

Central bank (for credit societies), Zentralkasse. 

Central purchase and sales society, Zentral bezags- und absatz-genossenschaft. 

Central Union of German Consumers’ Societies, Zentralverband Deutscher Konsum- 
vereine. 

Combined raw-material supply and sales society, Rohstoff- und Magazin-genossenschaft. 
Consumers society, Konsumverein. 

Cooperative Society, Genossenschaft. 

Credit Society, Kreditverein, Darlehnskasse, etc. 

Exchange day, Borsentag. 

Federation of Geiman Cooperative Agricultural Societies, Vereinigung dei deutschen 
landwirtschaftlichen Genossenschaften. 

General meeting (of a cooperative society), Generalversammlung. 

General Union of German Industrial and Economic Cooperative Societies founded on 
self-help, Allgemeiner Verband der auf. Selbathilfe beruhenden deutschen Erwerbs- 
und Wirtschafts-genossenschaften. 

German Cooperative Bank of Sorgal, Parrisius & Co., Deutsche GenossenschafLba 11 k 
von Sorgel, Parrisius & Co. 

German Officers’ Society, Deutscher Offizier-Verein. 

Household Society (of Hanover), Houshaltsverein. 

Imperial Agricultural Societies’ Bank, Landwirtschaftliche Reichsgenossenschafts- 
bank. 

Imperial Union of German Agricultural Cooperative Societies, Reichsverband der 
deutschen landwirtschaftlichen Genossenschaften. 

Industrial Bank, Gewarbebank. 

International Alliance of Agricultural Cooperative Societies, Internationaler Bund 
der landwirtschaftlichen Genossenschaften. 

International Cooperative Alliance, Internationaler Genossenschaftsbund. 

Loan association, Darlehnskasse, Darlehnskasseverein, Kreditverein, etc. 
Milk-vending society, Melkereigenossenschaft. 

Neuwied Union, Neuwieder Verband. 

North Star Berlin Innkeepers’ Brewery, Nordstern Berliner Gastwirte Brauerei. 
Officials’ society, Beamtenverein or Beamtenkonsumverein. 

Principal Union of German Industrial Cooperative Societies, Hauptverband deuLcher 
gewerblicher Genossenschaften. 

Products society, Produktivgenossenschaft. 

Prussian Central Bank for Cooperative Societies, Preussische Zentralgenossenschafts- 
kasse. 

Purchase association, Einkaufsvereinigung. 

Purchase society, Wareneinkaufsverein. 

Raw-material supply association, Rohstoffgenossenschaft. 



COOPERATION AND COST OF LIVING. 


35 


Registered cooperative society, Eingstragene Genossenschaft. 

Sales society, Magazingenossenschaft. 

Teachers’ Society, Lehrerverein. 

Wholesale Purchasing Company foi German Consumers’ Societies (Ltd.), Grossein- 
kaufs-Gesellschaft deutscher Consumvereine, b. m. II. 

Work association, Werkgenossenschaft. 

BIBLIOGRAPHY. 

Cruger, H.: Aus Vergangenheit und Gegenwart der deutschen Genossenschaften, 
Berlin, 1900. 

Die Aufgaben unserer Organization. Breslau, 1907. 

Einfuhrung in das Genossenschaftswesen. Berlin. 

Zur Kritik der Agitation gegen die Konsumvereine. Berlin, 1899. 

Oppermann, G., and Hantschke, H.: Iiandbuch iiir Konsumvereine. Breslau, 1898. 

von Neumann: Das Deutsche landwirtschaftliche Genossenschaftswesen. Stuttgart, 
1903. 

Geschaftsbericht des Internationalen Bundes der landwirtschaftlichen Genossen¬ 
schaften fiir die Zeit von 1. September 1908 bis 1. September 1910. Darmstadt, 
1910. 

Geschaftsstatistik fur das Jahr 1909. Ilerausgegeben von dem Hauptverband 
Deutscher gewerblicher Genossenschaften. Wittenberg, 1911. 

Interviews on the Banking and Currency Systems of England, Scotland, France, Ger¬ 
many, etc. National Monetary Commission. Sen. Doc. No. 405, 61st Cong., 2d 
sess., Washington, 1910. 

Jahr- und Addressbuch der Erwerbs- und Wirtschaftsgenossenschaften im deutschen 
Reiche, 1908. Preussische Centralgenossenschaftskasse. Berlin, 1908. 

Jahrbuch des Allgemeinen Verbandes der auf Selbsthilfe beruhenden deutschen 
Erwerbs- und Wirtschaftsgenossenschaften, E. V., fiir 1910. Berlin, 1911. 

Jahrbuch des Reichsverbandes der deutschen landwirtschaftlichen Genossenschaften 
fur 1910. Darmstadt, 1911. 

Jahrbuch des Zentralverbandes deutscher Konsumvereine, 1911. Hamburg, 1911. 

Jahresbericht des Generalanwalts des Reichsverbandes der deutschen landwirtschaft¬ 
lichen Genossenschaften fiir 1910-1911. Darmstadt, 1911. 

Miscellaneous Articles on German Banking. National Monetary Commission. Sen. 
Doc. No. 508, 61st Cong., 2d sess., Washington, 1910. 

Mitteilungen fiber den 52. Allgemeinen Genossenschaftstag des Allgemeinen Ver¬ 
bandes zu Stettin, 1911. Berlin, 1911. 

Mitteilungen zur deutschen Genossenschaftsstatistik fiir 1908. Preussische Central¬ 
genossenschaftskasse. Berlin, 1910. 

Report of the Proceedings of the Eighth Congress of the International Cooperative 
Alliance held at Hamburg, 1910. London, 1911. 

Yearbook of International Cooperation, First Year. International Cooperative Alli¬ 
ance. London, 1910. 


FRANKFORT ON THE MAIN. 

Cooperation and the Cost of Living. 

[From Consul General Frank D. Hill, Frankfort on the Main.] 

In compliance with department’s special consular instruction No. 66, dated October 
12, 1911 (File No. 165060): 

INTRODUCTORY. 

According to the “ Statistisches Jahrbuch fuer das Deutsche Reich” for 1911, there 
were on January 1, 1909, 28,141 cooperative societies (‘‘Genossenschaften”) with 
4,579,740 members in the German Empire. Of these, 2,205 with 1,328,779 members 
were consumers’ cooperatives. For further information with respect to distribution 
of cooperatives as to object, etc., reference is made to report from this office entitled 
Cooperative Societies in Germany,” dated October 3, 1911. Figures given in above 
report are not repeated, the present report being confined to this consular district in 
compliance with department’s circular instruction and much of the information not 
falling properly under the subject matter of this report, i. e., effect on the cost of living 
to the members of cooperative societies either for the distribution of the common 
necessaries of life or the production and marketing of agricultural products. 



36 


COOPERATION AND COST OF LIVING. 


AGRICULTURAL COOPERATIVES. 

The so-called “ landwirtschaftliche Genossenschaften”—that is, agricultural coopera¬ 
tives for the production or marketing of agricultural products or other purposes—do 
not contribute in first instance to reduce cost of living of members. Their object is 
primarily to secure increased profits to their members, and they may in some instances 
tend to increase (or at any rate keep up) prices of agricultural products to consumers 
by restraining competition. Agricultural cooperatives are of several kinds—the most 
popular and most generally successful being the cooperative dairies, which exist also 
in the United States. Cooperatives are also found in Germany in following fields of 
agricultural activity: Wine growing, distilling, fruit raising, slaughtering, fishing, 
forestry. Cooperatives are also formed for the purchase of raw materials, fertilizer, etc., 
and for agricultural machinery. Farmers’ credit unions are very numerous. 

The cooperative movement is of great importance in Germany’s agricultural organi¬ 
zation. Particularly in the eastern part of the Empire, cooperatives'are very well 
organized with common sales agencies (“Zentralverkaufsstellen”) for neighboring 
cooperatives. There is further an association of German agricultural cooperatives 
(“Reichsverband der deutschen landwirtschaftlichen Genossenschaften”), with 
headquarters at Darmstadt. 

According to latest figures available, there are about 2,200 agricultural cooperatives 
in this consular district. Of these, a large number are credit unions. Only in very 
rare instances do agricultural cooperatives attempt to supply their members with 
common necessaries of life. 


consumers’ cooperatives. 

As stated above, there were on January 1, 1909, 2,205 consumers’ cooperatives 
(‘ ‘ Konsumvereine ”) with total membership of 1,328,779 in the German Empire. Thi s 
office has no figures at hand enabling it to estimate number of consumers’ cooperatives 
in its district. There are cooperative societies of this description in practically all 
the larger cities and towns of this part of Germany. According to reports for 1910, 
the principal consumers’ cooperatives in this district (not including Frankfort) had 
following membership: Oassel, 6,107; Darmstadt, 2,659; Giessen, 1,423; Hoechst, 
2,560; Wiesbaden, 2,862. 

In addition to several small associations for purchase of supplies in common (“ Fami- 
lien-Vereinigungen”), often only "coal (“ Kohlen-Kassen”), located chiefly in the 
suburbs, Frankfort has four important consumers’ cooperatives: “ Konsumverein fuer 
Frankfurt-am-Main und Umgegend,” “ Eisenbahn-Konsumverein Frankfurt-am- 
Main” (for railway employees), “Frankfurter Beamten-Vereinigung, Konsumverein” 
(for officials), and “ Wirtschaftliche Vereinigung kaufmaennischer und technischer 
Angestellter in Frankfurt-am-Main” (for commercial and technical employees). 

“konsumverein.” 

Of these, by far the most important is the “ Konsumverein fuer Frankfurt-am-Main 
und Umgegend” (Consumers’ Cooperative for Frankfort-on-Main and Vicinity). The 
purposes of the present report are, it is believed, best served by a detailed description 
of the growth, organization, and methods of this successful consumers’ cooperative. 

inception and growth. 

As far as can be ascertained, a society existed in Frankfort about 1850 under the name 
“ Gesellschaft zur Beschaffung von billigen Winterbeduerfnissen” (Association for 
Securing Cheap Winter Necessaries). This society was converted into a consumers’ 
cooperative in 1855 under the name “Konsum-Verein Frankfurt-am-Main.” It is 
not known just how long this socitey remained in existence. 

There were various cooperative movements during the seventies and eighties, many 
of them abortive, none of which appear to have been of much importance. In 1893 
a society was formed for the purchase of coal in considerable quantities for distribution 
among the members. In 1899 the local syndicate of trade unions took up the matter 
of forming a consumers’ cooperative. Meetings were held which led to the election 
of a committee which, in cooperation with the so-called “ Kohlenkasse ” (society for 
purchase of coal), existing since 1893, succeeded in forming a consumers’ cooperative. 

This consumers’ cooperative, now called “ Konsum-Verein fuer Frankfurt-am-Main 
und Umgegend” (Consumers’ Cooperative for Frankfort on Main and Vicinity), has 
grown rapidly during the 11 years of its existence. In 1904 it increased its field of 
activity by the acquisition of a cooperative bakery which had been in existence since 
1893. In 1906 four consumers’ cooperatives in Bockenheim, Roedelheim, Cronberg, 


COOPERATION AND COST OF LIVING. 


37 


and Heddernheim were taken over by the Frankfort society. Bockenheim, Roedel- 
heim, and Heddernheim were formerly independent communities, but are now incor¬ 
porated. Cronberg is a town in the Taunus Mountains, about 10 miles from Frankfort, 
with some three thousand inhabitants. In 1909 a consumers’ cooperative in Offen¬ 
bach was taken over. Offenbach is an important manufacturing center of 75,500 
inhabitants, 3 miles east of Frankfort. The Offenhach Verein, which was founded 
as a consumers’ cooperative in 1900, was in financial difficulties as a result of experi¬ 
ments in production. In addition to shoe repairing, a brush factory had been opened 
after an unsuccessful strike in the brush industry and the Verein had also opened up a 
dry goods store instead of confining itself to groceries. In view of the difficulties of 
the Offenbach Verein, the Frankfort cooperative offered, after negotiations with the 
creditors, to assume its responsibilities. 

The following figures show growth of the “ Konsumverein fuer Frankfurt-am-Main 
und Umgegend ” (figures shown for business year from July 1 to June 30): 


Business year. 

Number of 
sales stores. 

Number of 
members. 

Business year. 

Number of 
sales stores. 

Number of 
members. 

1900-1. 

3 

2,046 

2,780 

3,536 

4,718 

5,511 

7,898 

1906-7... 

30 

9,448 
11,087 
13,305 
16,704 
20,449 

1901-2 . 

9 

1907-8... 

32 

1902-3. 

11 

1908-9. 

40 

1903-4. 

13 

1909-10. 

46 

1904-5. 

16 

1910-11. 

52 

1905-6. 

28 



Following figures show amount of business done, profits (after distribution of dis¬ 
count to members), and reserves accumulated during the same period: 


Business year. 

Turnover. 

Profits. 

Reserves. 

1900-1. 

$50,336 
138,154 
157,938 
210,719 
312,271 
460,742 

$677 

$245 

1901-2. 

155 

561 

1902-3. 

1,033 

1,357 

3,589 

991 

1903-4. 

7,725 
9,442 
14,012 

1904-5. 

1905-6. 

3,500 



Business year. 

Turnover. 

Profits. 

Reserves. 

1906-7. 

$627,166 

$3,782 

$17,262 

1907-8. 

829,052 

5,971 

20,762 

1908-9. 

983,112 

9,952 

26,893 

1909-10. 

1,322,352 

10,029 

35,954 

1910-11. 

1,693,128 

9,761 

43,924 


ORGANISATION. 

The “Konsumverein fuer Frankfurt-am-Main und Umgegend” is an “ Eingetragene 
Genossenschaft mit beschraenkter Haftpflicht” (registered cooperative with limited 
liability). 

Liability of each member is fixed at $7.14. 

Any person or society having power to contract may become a member of the Verein. 
Members pay an entrance fee of 11.9 cents plus 11.9 cents as first installment toward 
a “Geschaeftsanteil” (share). A share costs $7.14. This sum can be paid up at once 
or in installments, but at least $2.38 must be paid during the first year, $4.76 during the 
first two years, and $7.14 at the end of the third year. A member can purchase up to 
50 shares, although this does not entitle him to more than one vote in the general 
meetings. Membership is forfeited in case regular installments for shares are neglected 
longer than six months in spite of two warnings; further, in case no goods are purchased 
from the Verein during two years. 

A regular general meeting in which each member present has a vote is held once a 
year, at least four months after expiration of business year (July 1 to June 30). If 
regularly summoned, meeting is empowered to transact business, irrespective of number 
of members present. The general meeting approves annual report, disposes of profits, 
fixes entrance fee, elects executive officers, modifies statutes, etc. 

The general meeting elects the “ Aufsichtsrat ” (board of supervisors) and the 
“Vorstand” (board of managing directors). 

The “Vorstand” is composed of three members elected by the general meeting. 
The “ Vorstand ” represents the society and conducts its business. Written and verbal 
contracts can be made by two members of the “Vorstand” acting together. The 
“Vorstand ” attends to purchase and sale of goods, keeps the books, etc. It must have 
the condition of the society examined every two years by an impartial expert account¬ 
ant. The members of the “Vorstand” receive an initial annual salary of $618.80, 
which is gradually increased to $952. 
















































38 


COOPERATION AND COST OF LIVING. 


The “Aufsichtsrat” (board of supervisors) is composed of 17 members elected by 
the general meeting for a period of three years, one-third retiring every year. The 
members of the ‘ ‘ Aufsichtsrat ” must be members of the Verein. The ‘ ‘ Aufsichtsrat ” 
supervises the conduct of the business of the Verein by the “ Vorstand.” The members 
of the “Aufsichtsrat” are bound to use ordinary diligence in the exercise of their 
duties, and members who neglect their duties are liable to the Verein to the full extent 
of their property. 

The “Aufsichtsrat” and the “Vorstand” hold common meetings for certain kinds 
of business which the “Vorstand” can not transact alone. Among these are, in addi¬ 
tion to decisions affecting business methods, long contracts, investment of reserves, 
etc., the following: Orders for goods exceeding $2,380, orders exceeding supply needed 
for six months, employment and salary of personnel, etc. 

Members are entitled to 5 per cent discount on goods purchased by them during the 
year. This participation in profits, granted in the form of a discommon purchases 
made during the year, does not exceed 5 per cent. It is distributed during November 
or December for preceding business year (July 1 to June 30). In addition dividends 
may be declared on paid-up stock; according to annual report for 1910-11, 4 per 
cent was allowed on paid-up shares. 

If members so desire, 5 per cent discount due them will be credited to them on 
account of savings (the statutes include among objects of the Verein the building of 
dwellings and provide that necessary funds for same shall be raised by savings). 
In case members have not paid up their shares, discount due them is simply credited 
to their account. 

The Konsumverein supplies its members with bread, fuel, groceries, and wine and 
beer. It has, in addition, contracts with a considerable number of stores in Frankfort 
(department, clothing, etc.), which give the members of the Verein 6 per cent dis¬ 
count on their regular prices. 

The following figures are taken from the annual report for the business year from 
July 1, 1910, to June 30, 191-1: 

The Konsumverein had 20,449 members at the close of the year. 

The members are credited with the following sums on the books of the Verein: 
Paid-up shares, $80,382; savings, $259,048. 

Goods purchased by members from the Verein itself amounted during business 
year 1910-11 to $1,205,396; those purchased by members in stores with which the 
Verein has contracts (see above) amounted to $487,732, making a total turn over of 
$1,693,128, or an average of $82.82 per member. 

The Konsumverein owns a piece of ground in the outskirts of the city with a large 
warehouse, two dwellings, stables, and other buildings, whole having cost about 
$115,000. It is connected by rail with the Prussian railway net. 

The Verein has the following employees: Three members of “Vorstand” (board of 
managing directors), 5 clerks, 53 storekeepers, 58 sales crirls, 15 volunteers, 46 appren¬ 
tices (female), 31 warehouse employees, 15 drivers, 4 chauffers, 36 bakery employees, 
7 mechanics and miscellaneous employees. 

After payment of 5 per cent discount to members on purchases made during the year 
and transferring $14,115 to the sinking fund there remained a net profit of $9,761 for 
the business year 1910-11. 

Reserves amounted on June 30, 1911, to $43,924. (It is interesting to note that the 
statutes provide that in case of dissolution, balance after all liabilities of the Verein 
have been satisfied can not under any circumstances be divided among the members, 
but must be turned over to a society having similar aims or be paid into the treasury 
of the Union of German Consumers’ Cooperatives.) 

INTERMEDIATE MEANS EMPLOYED FOR DISTRIBUTION AND DELIVERY OF DOMESTIC 

SUPPLIES. 

The Konsumverein has 53 stores, called “ Verteilungs-Stellen ” (distributing points). 
Some 20 of these stores are located outside the city limits. The Verein is represented 
in Offenbach (3 miles east of Frankfort) with 7 stores, further in Vilbel, Griesheim, 
Fechenheim, Bischofsheim, Oberursel, Doernigheim, Eschborn, Steinbach, Bergen, 
Enkheim, Cronberg, and Homburg (13 miles north of Frankfort). 

The cooperative stores are in charge of storekeepers, who receive salaries ranging 
from $285.60 to $595 per year. The storekeepers order supplies once a week, all sup¬ 
plies being delivered by the central warehouse. The Verein has 16 horses, 2 heavy 
and 2 light automobile drays. 

Storekeepers can sell only to members. A prospective member can purchase goods 
twice on trial; if purchaser does not then join the Verein no more goods are sold him 

All sales are made for cash only. 

Goods are delivered at house, if purchase exceeds $1.19. 


COOPEBATION AND COST OF LIVING. 


39 


EFFECT ON COST OF COMMON NECESSARIES OF LIFE TO CONSUMERS. 

This office is advised by an official of the Konsumverein that goods sold by the 
Verein in its stores are 8 to 10 per cent cheaper than same goods in other stores; that 
is, prices are on an average about 8 to 10 per cent under retail prices. In addition, 
members of the Verein receive at the end of the year 5 per cent discount on purchases 
made. This estimate of difference in prices of supplies is considered about right by 
the secretary of the chamber of commerce here. As stated above, the Verein supplies 
its members with groceries, bread, fuel, and wine and beer. Stores with which the 
Verein has contracts give its members 6 per cent discount on regular prices. 

The Verein, so says the official seen, aims to regulate prices and has been fairly 
successful in its efforts to do so, thanks to its ability to purchase large quantities 
of supplies. 

ATTITUDE TOWARD STORES. 

The Konsumverein is, of course, a dangerous competitor for retail grocers. 

It does not itself handle dry goods and as stated above has contracts with num¬ 
erous department and dry goods stores by which its members receive discounts. 

As regards the retail grocery trade here, the situation is stated to be as follows by 
the official of the Verein above mentioned, this statement being confirmed by the 
secretary of the chamber of commerce: 

The Konsumverein is gradually getting to supply a considerable portion of the 
laboring classes. It sells first-class goods but they are not, of course, fancy, its mem¬ 
bers being recruited chiefly among laborers. The middle classes are supplied largely 
by one or two large firms which have branch stores all over the city. The wealthy 
patronize the fancy grocers. Business of small independent grocers is being con¬ 
fined gradually to consumers who do not pay cash. The Konsumverein sells only 
for cash. A number of smaller grocers have formed a cooperative purchasing society 
(“Die Einkaufs-Genossenschaft der Kolonialwarenhaendler’’) in order to obtain 
same advantages as Konsumverein in purchase of goods at wholesale. 

PURCHASE OF SUPPLIES. 

Supplies are purchased partly from wholesalers, partly from producers. Some 
classes of goods are bought from agricultural cooperatives. 

The leading source of supply is, however, the ‘ ‘ Grosseinkaufs-Gesellschaft Deut- 
scher Konsumvereine ” with headquarters in Hamburg (Wholesale Buying Associa¬ 
tion of German Consumers’ Cooperatives), which may best be described as a con¬ 
sumers’ cooperative whose members are consumers’ cooperatives (“ein Konsumve¬ 
reine fuer Konsumvereine”). The following brief description of this very important 
organization is taken from the annual report of the “G. E. G.” (“Gross-Einkaufs- 
Gesellschaft”) for 1910. This society is organized as a cooperative, its members 
being consumers’ cooperatives. It had on December 31, 1910, a membership of 
675, and 1,554 customers in all, the “G. E. G.” selling also to cooperatives which 
are not members. The turnover of the “G. E. G.” amounted to $11,067,294 in 1906, 
$14,248,160 in 1907, $15,655,230 in 1908, $17,829,963 in 1909, and $21,103,376 in 1910. 
Warehouses are located at Hamburg, Erfurt-Ilversgehofen, Chemnitz, Berlin, 
Duesseldorf, and Mannheim. In addition to groceries, paper, shoes, household 
articles, etc., are supplied. The “G. E. G.” states one of its primary objects to be 
to further “cooperative production for organized consumption” (“genossenschaftliche 
Eigenproduktion fuer den organisierten Konsum”). It operates three cigar and one 
soap factory. It also has a banking department. The net profits of the “G. E. 
G.” after generous transfers to sinking funds amounted in 1910 to $241,750. 

The “Konsumverein fuer Frankfurt-am-Main und Umgegend” is a member of 
the “G. E. G.,” its share of capital stock amounting to $2,737. During the business 
year 1910-11 the Frankfurt Verein purchased $217,426 worth of supplies from the 
“G. E. G.” 

OTHER CONSUMERS’ COOPERATIVES HERE. 

Of the other consumers’ cooperatives here (see p. 3), the “ Wirtschaftliche Verein - 
igung kaufmaennischer und technischer Angestellter in Frankfurt-am-Main” (Eco¬ 
nomic Association of Commercial and Technical Employees), membership in which 
is limited to commercial and technical employees—construed in fairly wide sense— 
has about 7,000 members. Members are supplied through three stores located in 
different parts of the city. Total sales to members in society stores amount to about 
$70,000 a year—groceries and fuel. Society can sell only to members, sales of such 
societies being limited to members by law. This society is not a registered coopera- 


40 


COOPERATION AND COST OF LIVING. 


tive and the board of managers representing it incurs full legal responsibility. As 
regards prices, the “Wirtschaftliche Vereinigung” aims to sell at cost price plus 
running expenses. At the end of the year 6 per cent discount is distributed to mem¬ 
bers on goods purchased during the year. In addition, the society has contracts 
with some 90 large firms here of all kinds, which deliver coupons to its members. 
These coupons are handed over to the board of managers, which collects discount 
from stores and distributes same at end of year. The society has further contracts 
with 300 stores, which give its members discounts at time of purchase. Discounts 
given by stores vary. The annual distribution of discounts is taking place now 
(before Christmas). The society distributes $3,570 on purchases made in its own 
stores and $21,420 on purchases made in stores with which it has contracts. The 
chairman of the board of managers estimates that members receive approximately 
$20,000 in discounts from stores which give discount at time of purchase, making a 
total of about $45,000 saved to the 7,000 members, in addition to savings made through 
reduced cost of necessaries bought in cooperative stores. The members pay a small 
entrance fee and annual dues. 

It is not deemed necessary to go into details of organization of other cooperatives 
here, the main features being the same as in the case of societies described above. 

The “Frankfurter Beamten-Vereinigung” (limited to officials) has according to 
the last annual report of the chamber of commerce 5,958 members and the “Eisen- 
bahn Konsumverein ” (limited to railway employees) 1,857. 

COOPERATIVES AT CASSEL. 

The consular agent at Cassel reports: 

The principal cooperative stores (Konsumvereine) in Cassel are (1) Konsum- und 
Sparverein fuer Cassel and vicinity, (2) Eisenbahn-Konsumverein, (3) Casseler 
Einkauf-Genossenschaft fuer Brennmaterial, (4) Raiffeisen Kornhaus Genossenschaft. 

The first is a socialistic undertaking for the buying (at wholesale) and selling (at 
retail) to the members of the organization at cost after adding about 2 per cent for 
expenses. All kinds of food, meat, provisions, groceries, bread, etc., are provided. 
While the prices of most of the articles are perhaps a little less than in the ordinary 
open stores and shops, the quality of the stores provided is said to be not of the best. 

The second concern is for the benefit of the railway employees, of whom there are a 
great number in this city, and is conducted on about the same principles as the former, 
but the goods are said to be better. 

The third is for providing fuel at cost with a small addition for running expenses. 

The fourth is an agrarian undertaking, similar to the ‘ ‘ grange stores ’ ’ in the Western 
States in former years. 

The sentiment of the commercial classes, more particularly the retailers, is not 
favorable to these cooperative undertakings, but mainly against the Raiffeisen 
Kornhaus Genossenschaft. 


COOPERATIVES AT WIESBADEN. 

The consular agent at Wiesbaden reports: 

(1) Cooperative societies for the distribution of the common necessaries of life. 

They are known in this district, and throughout Germany, by the name of Kon¬ 
sumvereine. They do not appear to have much importance in the various towns of 
this district, or to show great prosperity, while in other German districts and cities, 
especially Breslau, Goerlitz, Karlsruhe, Pforzheim, and also Frankfort-on-Main and 
Mayence they seem to be flourishing. 

A much better showing is made here by the— 

(2) Cooperative societies for the production and marketing of agricultural products. 

But here also it must be said that this applies more to the needs of the farmer himself 

than to the needs of the consumer of farming products. 

These Landwirtschaftliche Genossenschaften (agricultural societies), as they are 
termed, are excellently managed, organized, and centralized all through Germany, 
with branches and subsidiary branches in every Province and governmental district. 

The Wiesbaden branch supplies the farmers who are members with all the prin¬ 
cipal necessities for running their agricultural enterprises at reduced cost, including 
fuel, feed for cattle, seeds, fertilizer, etc. The name of this branch is Central Ein- und 
Verkaufsgenossenschaft fuer den Regierungsbezirk Wiesbaden, managing director, 
Herr Petit jean. It buys from mill, factory, and mine direct, and sells to the farmer 
with just enough profit to pay running expenses. 

It also aims to distribute and market the farmers’ products, like cereals, beets, 
potatoes, cattle, etc., but so far this side of its activity is in embryonic state, farmers 
appearing to prefer to sell their products themselves. 


COOPERATION AND COST OF LIVING. 


41 


It should be mentioned here that the said Central Ein- und Verkaufsgenossen- 
schaft has also established in the country (that is, the adjacent rural districts) so-called 
Haushaltungs-Konsumvereine (household cooperative societies), selling groceries 
and similar goods to the country people under the Central Verein’s direction and 
supervision. These branches are doing fairly well as against the city Konsumvereine 
mentioned above. 

Dr. Hans Krueger, Charlottenburg, Berlin, is the main expert on cooperative ques¬ 
tions in Germany. He has written and published several volumes on the subject con¬ 
tained in the Handbibliothek fuer das Genossenschaftswesen. 

Frank D. Hill, Consul General. 

American Consulate General, 

Frankfort-on- Main, Germany, December 11, 1911. 


DRESDEN. 


Cooperation and the Cost of Living. 


Cooperative societies have been in existence in Saxony for over 50 years and cover 
practically every province of such associations. The following table shows the 
growth of these societies in Saxony during the last eight years: 


Year. 

Number of 
societies. 

Number of 
members. 

Year. 

Number of 
societies. 

Number of 
members. 

1904.. 

- 550 

244,079 
256,699 
275,889 | 
286,028 

1908. 

767 

293,640 

320,646 

327,755 

1905. 

625 

1909. 

827 

1906. 

665 

iQin 

879 

1907. 

717 









The oldest society in Saxony was established in 1851 for the purpose of buying 
food supplies for the members at wholesale prices, and in the following years these 
societies have sprung up all over Saxony, so that every town and many villages have 
such associations. In Saxony on January 1, 1910, there were 209 cooperative societies 
for buying food and household supplies, with 256,575 members; 20 agricultural socie¬ 
ties, with 1,122 members, and 20 industrial, with 3,562 members, for disposing of 
products; and 82 agricultural societies, with 4,815 members, for purchasing seed and 
supplies. The purpose of the cooperative societies is to procure for the members 
their supplies at wholesale prices and sell them to members at practically cost price 
less administrative charges. The general'system in vogue in Saxony is to place an 
advance of from 15 to 25 per cent on the cost price, so as to bring the selling price of 
the article to ordinary market prices and at the end of the year to distribute the 
profits among the members. The greater members of the societies keep shops and sell 
to the general public, with a system of rebate as an inducement to buy, but actual 
profits are distributed among members only. There is some feeling between the co¬ 
operative societies and independent dealers, but this is ascribed mainly to political 
feeling, as the independents maintain that the cooperative societies are “run by 
Socialists.” Owing to the stringent German laws against illegal competition (unlau- 
terer Wettbewerb), these societies do not, as regards the nonmembers, offer dangerous 
competition to independent traders. In most cases the societies purchase from 
wholesale cooperative societies, which are in fact amalgamations of their own societies. 
Only the very largest of the cooperative societies purchase from producers, in the 
same manner'as the general wholesaler does. In the case of imported goods it is 
customary to buy direct from the wholesale importer, but I am informed that a large 
wholesale cooperative society is making arrangements to import such articles as 
coffee, fruit, etc., direct from the producer.^The largest cooperative society in 
Saxony maintains its own sugar refinery. 

T. St. John Gaffney, 

Consul General. 

Dresden, Saxony, January 26, 1912. 























42 


COOPERATION AND COST OF LIVING. 


COOPERATIVE SOAP FACTORY IN GROBA-RIESA, SAXONY. 

The Wholesale Purchasing Association of German Cooperative Societies (Grosse- 
inkauf-Gesellschaft deutscher Consumvereine, Hamburg) has recently erected a 
factory at Groba-Riesa, in Saxony, for the production of soap for the cooperative 
societies who are members of the association. This is the first step in Germany on 
the part of the cooperative societies toward manufacturing goods for their members. 
The first plans for cooperative production were discussed in Germany as long ago 
as 1860. It was argued that an association of workmen, for example, trained in the 
production of soap, by associating themselves and working in a factory owned by 
them would be able to keep all the profits of the undertaking and at the same time 
avoid destructive labor disputes. This plan, however, was never brought into opera¬ 
tion in Germany, as such experiments, chiefly in France, had proved that the lack 
of business training, and especially of organizing talent, on the part of the workmen 
owners placed them at a disadvantage on the market for buying raw material and 
selling their product. It was also argued on political grounds that the labor ques¬ 
tion could not be settled by such methods, as the workmen by becoming owmers 
became capitalists, and that this situation would leave matters on the status quo 
ante. 

The solution of the question, from the point of view of the workers, was that they 
should produce only for their own consumption, so that the members of the allied 
cooperative societies would form a regular and permanent market for taking over 
the products. This situation, by relieving the allied societies of competition on 
the selling market and the elimination of all advertising, sales organization, and 
such expenses, places them at a great advantage over private manufacturers who 
are exposed to competition in buying and selling. 

Many difficulties were experienced in obtaining the concession to build a soap 
factory. The society attributes most of this opposition to political motives, as the 
general opinion prevails that the cooperative societies are socialistic undertakings. 

Up to the present no balance sheet of the factory has been published, but it is 
stated in business circles that a net profit of 6.6 per cent has been made, after allow¬ 
ing for generous percentages for depreciation and reserve funds. 

(Signed) T. St. John Gaffney, 

Consul General. 

Dresden, Saxony, March 23, 1912. 


COBURG. 

Cooperation and the Cost of Living. 

There are several societies in this consular district called “Konsum-und Productiv- 
Verein” and “Neuer Konsum-und Product! v-Verein,” all registered societies with 
limited liabilities. The growth of these societies, which are composed principally 
of social democrats, has been somewhat limited during the last five years, principally 
because they have been opposed and fought by the so-called “regulars”; that is, retail 
merchants who do not belong to these societies, as noted by me in this report, under 
“Opposition of Retailers to these Societies.” 

inception and growth. 

There is no particular historical movement connected with any of these societies 
and they are modeled, as are all such societies in Germany, on the Rochdale system. 
They make their purchases the same as independent retailers do and pay the same 
prices that the latter pay. 

METHODS OF JOINING AND OF OPERATION. 

Shares in the se vereins cost from 30 to 50 marks ($7.14 to $11.90) each, but anyone 
can become a member by paying from 2 to 3 marks ($0.47 to $0.71), the balance due 
being deducted from the amount received from dividends. These societies have 
stores where the members purchase the merchandise desired in the same manner 
as they would in any shop; but nothing can be sold to a person who is not a member, 
as it is against the rules governing the societies. Purchases are generally carried home 
from the shop by the purchaser, or delivered by the store free of charge. 



COOPERATION AND COST OF LIVING. 


43 


DEGREE TO WHICH THEY REDUCE THE COST OF THE COMMON NECESSARIES OF LIFE. 

The amount of the dividend paid shows the reduction in the net cost to the pur¬ 
chaser, because all food products bought in the shops of these societies cost the same 
as in the other or “independent” stores, that is, products are sold at the reigning 
market price; but at the end of every half year a dividend of from 10 to 14 per cent 
is paid to each member on the amount purchased by him during that time. 

OPPOSITION OF RETAILERS TO THESE SOCIETIES. 


Retailers have always been against these societies, and have sought the aid, from 
time to time, of the Government, and also of the chambers of commerce in the various 
places where the societies do business. They have also often petitioned to have the 
societies taxed so high that they will be unable to do business. So far as I have been 
able to ascertain, however, it makes no difference to the wholesale houses, as they sell 
to both the societies and the independent retail dealers at the same prices. Nearly 
every independent retail shop in Coburg, and also in other cities in the district, in 
order to overcome the effects of the consumer buying through the “ Konsumvereine ” 
(cooperative societies), gives a “rabatt” (discount) in the form of brown or red stamps, 
which are pasted in a book, which when full is worth, for example, 10 marks ($2.38) 
and represents a discount of 5 per cent. This plan has been strongly advised by at 
least one chamber of commerce in this district. There are no other cooperative 
societies of a semiprivate character in this city, or, so far as I know of, in this district, 
other than those modeled on the so-called “Rochdale system,” mentioned herein. 


Coburg, Germany, December 16, 1911. 


Frank Dillingham, 

Consul General. 


HAMBURG. 

[In reply to Special Instruction No. 66 (file No. 165,060).] 

Cooperation and the Cost of Living. 

As the development of cooperative agencies for the purchase and distribution of 
the necessaries of life in Germany has been the work of a political party rather than a 
purely economic movement until now, the attitude of those who oppose the somewhat 
vague program of the Social Democrats, as they are called, has been one of indifference 
amounting to antagonism toward the instrumentalities which the latter’s partisans 
have created. The cooperative societies which have been successful in Hamburg 
have contemplated not only the distribution of the necessaries of life among their 
members, but also the building of apartment houses, the extension of relief in various 
forms, and the payment of interest on money. 

It is a very interesting fact that when these cooperative unions set out to reduce the 
cost of the necessaries of life by the elimination of the middle-man, they discovered 
that he discharged a function which could not be dispensed with, and they therefore 
organized a central establishment of their own which should supply them with goods, 
precisely as the wholesale merchant supplies the ordinary retailer in the usual course of 
trade. Thus, we have 672 local unions owning and controlling a central establishment 
called the Grosseinkaufs-Gesellschaft deutscher Konsumvereine mb. II., with head¬ 
quarters at Besenbinderhof 52, in Hamburg. This parent institution is a wholesale 
purchasing and manufacturing company and also does a general banking business. 
Its capital in 1909 was $476,000, shares in which can be purchased by local cooperative 
unions in amounts of $119 or amounts divisible by $119. There are" 662 local coopera¬ 
tive enterprises in various parts of Germany which are not connected with the Gros¬ 
seinkaufs-Gesellschaft above referred to, but they may purchase supplies from it if 
they desire to do so. 

The Grosseinkaufs-Gesellschaft does not deal with the individual public, but only 
with^ocal unions, some of which are very strong, possessing numerous distributing 
depots, while others have a limited membership and perhaps only one establishment 
in which supplies can be procured. In Hamburg the “ Production ” consumption 
building and savings union (see my report dated November 2, 1911.) has a member¬ 
ship of 55,700. This particular society has its own bakery, purchases and dresses its 
own meat supply, and has 76 distributing branches all over the city, which in every 
outward respect resemble the ordinary grocery store. In these local establishments 



44 


COOPERATION AND COST OF LIVING. 


the public is permitted to purchase goods on the same terms as members, but members 
receive dividends of 4 per cent at the close of the business year based upon the amount 
of their purchases. Another similar society is the “New Society for Distribution, of 
1856,” with 35,000 members. There are two other comparatively small organizations 
of this class, and there is also an organization of Hamburg government employees, with 
headquarters at Boeckmannstr. 29, the dealings of which are confined, however, to 
public functionaries. With the exception of the cooperative establishment of govern¬ 
ment employees, the other Hamburg concerns obtain supplies to a large extent through 
the Grosseinkaufs-Gesellschaft in which they are stockholders. From 1909 to 1910 
the total membership of the great parent company, through its federated societies, 
increased from 1,048,000 to 1,172,000. The business transactions of the 672 unions 
operating through it increased from $64,974,000 to $73,066,000, in the same period. 
The business turn-over of the central institution itself amounted in 1909 to $17,829,963, 
and in 1910 to $21,103,376. In addition to its Hamburg headquarters, this central 
society maintains branch warehouses at Erfurt-Ilversgerhofen, Chemnitz, Berlin, 
Diisseldorf, and Mannheim. In 1909 the parent society earned $202,936 net, and in 
1910, $241,750 net. It was proposed in 1910 to distribute 5 per cent on paid in capital. 

In this consular jurisdiction among the active local unions to which no reference has 
been made are one at Lubeck with 3,075 members; the General Consumers’ Union 
at Kiel with 7,020 members; one at Rostock, with 1,715, and one at Lunenburg with 
1,045 members. 

While the believers in the efficacy of distributing goods in this manner were building 
up a very extensive business at the expense of the small retail establishments which 
hitherto had satisfied the requirements of the public, the owners of the latter took the 
lesson to themselves and instead of continuing to purchase their stocks from the 
ordinary jobbers or directly from manufacturers, organized cooperative central organi¬ 
zations of their own, in order that the weakest among them might be able to purchase 
at prices as low as those at which the cooperative unions secure their supplies, and this 
explains why it is that in Hamburg the difference between the retail prices quoted 
by the ordinary small grocer and those of the distributing agencies of the cooperative 
societies is not very great. Among the several cooperative buying establishments 
owned by Hamburg retailers, the more prominent are the Grosseinkaufsverein der 
Kolonial warenhandler zu Hamburg m. b. H., Resoldstrasse 60, Hamburg; the Ein- 
kaufs-Gesellschaft der Fettwaren-und Delikatessenhandler, Hamburg-Altona’s, Bock- 
mannstrasse 15, Hamburg; the Handels-Gesellschaft deutscher Apotheker, Berlin; 
the Hansa Drogen Haus, Gertrudenhaus, Hamburg, and the Verein der Kolonialwaren- 
handler von 1872 zu Hamburg, Bohnenstrasse 11, Hamburg. It will be observed that 
two of the societies named deal in drugs and pharmaceutical products only. 

A type of the cooperative organization, limited to a particular class of merchants is 
the Grosseinkaufsverein der Kolonial warenhandler, or, rendered into English, the 
“Wholesale Purchasing Union of Retail Grocers.” This organization was founded 
on October 4, 1903. It sells to dealers who are not members as well as to members, 
and may participate in Government contract business. One member may not own 
more than 25 shares, of which the par value is $71.40. As a rule, the amount of 
stock owned by one member should correspond to the amount of goods purchased in 
two weeks. Members receive dividends of 5 per cent per annum. Selling prices 
are fixed by a committee of members of whom there were 314 in 1910 against 235 in 
1909. The operations of this particular union extend throughout Schleswig-Holstein, 
Hanover and the State of Hamburg. It owns property worth $145,180, and its turn¬ 
over in 1910 amounted to $602,832. It will be seen that there is very little difference 
between cooperation in which a central society sells to a local society which in turn 
sells to individual members and cooperation in which a central society is owned by 
small merchants who deal with the ordinary public in the usual way. Indeed, the 
small merchant who is the member of a purchasing association has some slight advan¬ 
tage in the fact that, as a rule, he does his own work or employs very little labor, 
while the purely cooperative distributing agency requires a personnel which must 
be paid. Thus the Konsumverein “Production” pays its manager $1,190 per an¬ 
num, and the lowest salary paid to its clerks is $371.28. Salesmen in the distributing 
agencies are paid from $5.95 to $7.61 per week, and saleswomen from $2.85 to $4.99. 

Complaint has been expressed within the last few years that the cooperative socie¬ 
ties were able to undersell local dealers in many cases because they were subject to a 
general income tax only, and presumably escaped other forms of taxation to which 
private business enterprises are liable. As a result of this agitation, on July 1, 1911, 
in the State of Hamburg, they were required to pay 8 per cent of their profits to the 
Government as a tax. As this new law would have so operated that the “Society of 
1856,” as it is called, would have been obliged to pay $14,280 instead of about $1,904 
as taxes, this society and all the others which had not already done so, were obliged 


COOPERATION AND COST OF LIVING. 


45 


tlange their rules and take the form of limited liability companies, not differing 
from ordinary corporations. 

It is exceedingly difficult to make unerring comparisons between the prices quoted 
to the public in the distributing agencies of the cooperative societies and those of the 
ordinary retail establishments in Hamburg. Apparently the prices of the cooperative 
societies are lower than those which prevail elsewhere, but this is not invariably the 
case, and inquiry among provisioners is always met with the statement that when 
quality for quality is compared, the cooperative societies are unable to make a more 
favorable showing than the ordinary strong merchant, and that the most tangible gain 
of the buyer through these establishments is his possible dividend at the end of the 
year in case he is a member. 

Apparently the dealers in high-class food products have not been disturbed by co¬ 
operative competition, which undertakes more particularly to supply the working 
classes. While undoubtedly, the cooperative institutions are firmly established 
and are making progress, it must be remembered that this progress is constantly 
encouraged by the powerful political party which they represent, and it is not un¬ 
likely that the housewife who expects to effect substantial economies in dealing 
through this society feels a shade of disappointment when she considers the tangible 
results achieved. 

The attempt to compare prices quoted in the ordinary retail establishments and in 
the cooperative stores on November 24, 1911, has not given entirely satisfactory 
results. It does not always follow that the same descriptive word applies to the same 
class of goods, and there are other elements to be considered in a matter of this kind. 
However, subject to errors arising from the difficulty of instituting any exact com¬ 
parisons, I supply the following quotations on goods which are believed to be ap¬ 
proximately the same: 


Cooperative societies. 


Retail prices in store. 


New Society of 1856. 


Union of Hamburg 
Officials. 


Butter 
Sugar. 
Rice.. 
Beans. 


per pound.. 

.do.... 

.do— 


1.60 ink... 

38 c. 

32 to 36 pf. 
7.6 to 8.5 c 
18 to 40 pf. 
4.2 to 9.5 c 


do 


Soap... 
Candles 
Flour.. 
Coffee.. 
Lard... 


.do.... 
.do.... 
.do— 
.do- 


22 pf. 

5.2c. 

60 to 80 pf. 

14.2 to 19 c.... 

16 to 30 pf. 

3.8 to 7.1c_ 

1.50 to 2.40 ink 
35.7 to 57.1c... 


do 


Bacon.do_ 

Salt.do— 

Potatoes.do— 

Eggs.each.. 

Barley.per pound.. 

Pepper.do— 

Evaporated apples.do_ 

Jelly.i.do_ 

Starch.do_ 

Macaroni.do_ 

Lentils.per pound.. 

Sardines.per can.. 


80 to 100 pf.. 
19 to 23.8 c.. 

10 pf. 

2.3 c. 

4 to 5i pf.... 
0.9 to 1.3 c.. 
7 to 15 pf.... 

I. 6 to 3.5 c.. 
13 to 15 pf... 

3 to 3.5 c_ 

1 to 1.60 mk 
23.8 to 38 c.. 
60 to 70 pf... 
14.2 to 16.6 c 
50 to 80 pf... 

II. 9 to 19 c.. 


35 to 60 pf... 
8.3 to 14.2 c. 
25 to35 pf... 
5.9 to 8.3 c... 
60to 130 pf.. 
14.2 to 30.9 c 


Daily prices 


Daily prices. 


28 to 35 pf. 
6.9 to 8.3 c 
16 to 22 pf. 
3.8 to 5.2 c 
16 to 19 pf. 
3.8 to 4.5 c 


4.5 c.... 

48 pf. 

11.4 c. 

12 to 34 pf. 

2.8 to 8 c. 

1.36 to 1.60 mk. 

32.3 to 38 c. 

68 to 80 pf. 

16.1 to 19 c. 

92 pf.. 

21.8 c. 

10 pf. 

2 3c 

10 lb’, for 50 to 57 pf*.'.".’ - .* 

11.9 to 13.5 c. 

7* to 9 pf. 

1.7 to 2.1c. 

8§ to 9 pf. 

2 to 2.1 c. 

Per 25 grams: 7 to 9 pf... 

1.6 to 2.1c. 

60 pf. 

14.2 c. 

30 to 80 pf. 

7.1 to 19 c. 

32 pf. 

7.6 c. 

38 pf. 

9c. 

15 pf. 

3.5 c. 

45 to 54 pf. 

10.7 to 12.8 c. 


34 pf. 

8 c. 

18 to 22 pf. 

4.2 to 5.2 c. 

20 to 24 pf. 

4.7 to 5.7 c. 

20 pf. 

4.7 c. 

33 to 74 pf. 

7.8 to 17.6 c. 

15 pf. 

3 5c 

L36 to 1.70 mk. 

32.3 to 40.4 c. 

62 to 70 pf. 

14.7 to 16.6 c. 

85 pf. 

20.2 c. 

10 pf. 

2.3 c. 

Daily prices. 


Daily prices. 


20 pf. (coffee substitute). 
4.7 c. 

1 to 1.50 mk. 

23.8 to 35.7 c. 

60 pf. 

14.2 c. 

75 to 90 pf. 

17.8 to 21.4 c. 

28 to 32 pf. 

6.6 to 7.6 c. 

33 pf. 

7.8 c. 

30 pf. 


48 to 115 pf. 
11.4 to 27.3 c. 



































































































46 


COOPERATION AND COST OE DIVING 



Retail prices in store. 

Cooperative societies. 

New Society of 1856. 

Union of Hamburg 
Officials. 

Bread.loaf.. 

8 to 20 pf. 


Weighing 1.35 ko. to 2.97 
lbs., 30 pf. 

7.1 c. 

\ 

10 pf. 

2.3 c. 

Cidar vinegar, 8 to 40 pf. 

1.9 to 9.5 c. 

42 to 50 pf. 

9.9 to 11.9 c. 

Do.rolls.. 

1.9 to 4.7 c. 


Each, 2J pf. 

2 pf. 

Herrings, dry.each.. 

$0.0059. 

10 to 20 pf. 

$0*0047. 

Stale, 7 for 10 pf.; 2.3 c.. 
10 pf. 

Vinegar.p er liter.. 

Do.1.05 quarts.. 

2.3 to 4.7 c. 

40 to 45 pf. 

9.5 to 10.7 c. 

2.3*c. 

Cidar vinegar, 7 pf. 

1.6 c. 

Prunes.per pound.. 


44 to 52 pf. 



10.4 to 12.3 c. 


Flour.. 

Sugar.. 

Rice. 

Beans. 

Soap. 

Coffee. 

Salt. 

Potatoes. 

Eggs. 

Pepper. 

Evaporated apples 

Jellies. 

Starch. 

Macaroni. 

Lentils. 

Sardines.. 

Bread, rolls. 

Herrings, dry.. 

Vinegar.. 

Do. 


Retail prices from other 
sources. 


Produktion society. 


_per pound. 

.do... 

.do... 

.do... 

.do... 

.do... 

.do... 

per 10 pounds. 

.each. 

-per pound. 

.do... 

.do... 

.do.:. 

.do... 

.do... 


.each. 


_per liter. 

.1.05 quarts. 


18 to 28 pf. 

4.2 to 6.6 c. 

28 to 35 pf. 

6.6 to 8.3 C. 

20 to 50 pf. 

4.7 to 11.9 C. 

35 to 50 pf. 

8.3 to 11. 9c. 

20 to 50 pf. 

4.7 to 11.9 c. 

1.00 to 2.40 mk. 

23.8 to 57.1 c. 

10 pf. 

2.3c. 


80 pf. 

19 c . 

50 to 80 pf. 

11.9 to 19 c. 

20 pf. 

4.7 c. 

50 to 60 pf. 

11.9 to 14.2 c. 

25 to 35 pf. 

5.9 to 8.3 c. 


16 to 24 pf. 

3.8 to 5.7 c. 

22 to 36 pf. 

5.2 to 8.5 c. 

18 to 26 pf. 

4.2 to 6.1 C. 

20 pf. 

4.7 c. ^ 

20 to 40 pf. 

4.7 to 9.5 c. 

1.40 to 1.72 mk. 

33.3 to 40.9 c. 

10 pf. 

O Q p 

45 to 52 pf. 

10.7 to 12.3 c. 

10 to 12 pf. 

2.3 to 2.8 c. 

1.25 mk. 

29.7 c. 

60 to 70 pf. 

14.2 to 16.6 C. 


18 pf. 

4.2 c. 

50 to 60 pf. 
11.9 to 14.2 C. 
24 pf. 

5.7 c. 

32 to 60 pf. 
7.6 to 14.2 C. 

2 pf. 

$0.0047. 

10 pf. 

2.3 c. 

26 pf. 

6.1c. 
























































































COOPERATION AND COST OF LIVING. 


47 


A considerable portion of the general and loud complaint against the cost of living 
in Hamburg seems to be attributable to a lack of a sufficient number of public markets, 
and quite as much to a local habit of leaving such markets as are available to be 
visited by small tradesmen and hucksters, who retail their purchases on the following 
day at prices very much in advance of those which the individual consumer might 
have obtained had he taken the pains simply to secure his supplies where they pre¬ 
vailed. The public markets are stocked with fruits, vegetables, fish and some classes 
of meat, and the average prices of which are quoted in the daily press. Neither 
cooperative societies nor retail dealers have any marked advantage over the consumer, 
when they procure supplies at these places. To illustrate, I quote the following 
retail prices for fish per German pound in the public fish market on November 24, 
and the retail prices of the same fish in the ordinary small retail establishment. It 
will be seen that there is an enormous difference between the two sets of figures: 


Haddock. 

Do. 

Merling. 

Gurnard (“ Knurrhahn ”). 

Sturgeon trout. 

Plaice (“Schollen”). 

Bluefish. 

Ling (“Long”). 

Raw sole (“Rohzunge”).. 

“ Scharbenzunge ” . 

Turbot. 

“Kleiss”. 

Mackerel. 

Shark. 

Catfish. 

Halibut.. 

Lump sucker (“Lumbs”) 

Sole.. 

Herring. 

Pike. 

Perch. 

Trout. 

Bream (“Rotaugen”)_ 

Negro fish (“ Barsch”) 

Carp. 

Tench (“Schlei”). 

Eel. 

Salmon. 


Shop prices. Market prices. 


.large.. 
small.. 


Pf- 


60 

50 

30 


60 

28 

25 

80 

80 

180 

95 


80 


90 

100 

360 


14.2 

11.9 

7.1 


14.2 

6.6 

5.9 

19.0 

19.0 

42.8 

22.6 


19.0 


52.3 


21.4 

23.8 

85.6 


20 

15 

15 

20 

40 

18 

15 

50 

55 

130 

50 

20 

10 

.20 

45 

15 

180 

15 

60 

100 


7.1 

4.7 

3.5 

3.5 


4.2 

3.5 

11.9 
13.0 

30.9 

11.9 


4.7 

10.7 
3.5 

42.8 
3.5 

14.2 

23.8 


100 23.8 

160 38.0 


15 

30 

90 

130 

60 


3.5 

7.1 

21.4 

30.9 

14.2 


350 


83.3 


From all that can be learned the cooperative enterprises of Hamburg are making 
some progress, and have reduced the cost of some commodities to their members, 
while at the same time they have led to a cooperative movement among retail dealers, 
from which the consumer has benefited substantially. On the other hand, the 
economy to be effected by dealing in the cooperative establishments has not been 
sufficient to have driven the small retailer out of business to any striking extent, the 
two forms of distribution working side by, side in friendly competition. 

Robert P. Skinner, Consul General. 

Hamburg, Germany, December 5, 1911. 


MUNICH. 

Cooperative Societies in Bavaria. 

Among cooperative societies we may distinguish between societies in cities and 
small towns providing their members with the necessaries of life, chiefly food products, 
and agricultural cooperative societies the object of which is to sell agricultural prod¬ 
ucts and buy machines, manure, etc. (to the exclusion of the ordinary necessaries). 

COOPERATIVE SOCIETIES SELLING THE ORDINARY NECESSARIES OF LIFE. 

There were 100 societies of this sort in Bavaria in 1909. The four oldest societies 
date back to the time between 1869 and 1870. The majority were founded after the 
year 1900. 

The 100 societies had about 80,000 members or 10 per cent more than in the previous 
year. The average number of members of each society was nearly 800 (736 in the 











































48 


COOPERATION AND COST OF LIVING. 


previous year). One society in Munich had over 16,000 members, another society 
also in Munich more than 6,000, five from 2,000 to 5,000, nine from 1,000 to 2,000 
members. Eleven societies had no admission fee; 43 a fee up to 50 pfennigs; 32 up to 
1 mark; 7 up to 2 marks; 7 up to 5 marks; 19 societies compelled each member to 
participate in the capital of the society by a share up to 10 marks; 4 up to 15 marks, 
16 up to 20 marks; 3 up to 25 marks; 54 up to 30 marks; 3 more than 30 marks; the 
average participation being 32 marks, 72 pfennigs. The tendency at present is to 
increase the participating capital of the members in order to provide the societies 
with necessary funds for "the operation of their business. 

As a rule the responsibility of each member is limited to the capital he has invested, 
as stated above in the figures given. 

A number of the societies participated, with a total capital of about 140,000 marks, 
as members or partners of "the Wholesale Cooperative Society in Hamburg, the object 
of which is to attend to the wholesale buying of the goods sold by the societies that 
are its members. But not all Bavarian cooperative societies are members of the 
wholesale society. The goods which the latter sold to Bavarian societies in 1909 
had a value of about 4,350,000 marks, an increase of about 700,000 marks compared 
with the previous year. The goods bought from this wholesale society equaled about 
30 per cent of the entire value of the goods bought during the year. The remaining 
societies buy their goods either from private wholesalers or from manufacturers and 
producers or they have arrangements for the production of articles themselves (baker¬ 
ies, etc.). 

Special papers are published to promote the interests of the cooperative societies. 

The entire sales of the Bavarian cooperative societies in 1909 equaled about 
16,500,000 marks, or about 1,290 per cent more than in 1908. 

One society in Munich had a sale of more than 4,000,000 marks. 

The average sale per member equaled 259 marks; the highest figure in a society 
being 533 marks. 

The gross profit of all the societies equaled about 3,600,000 marks. 

Among the chief expenses the following may be mentioned: Interest on capital, 
109,000 marks; expenses of administration and operation, 1,630,000 marks; taxes, etc., 
164,000 marks. The net income was equal to about 1,500,000 marks. The expenses 
of administration and operation were about 20 marks per member. 

The loans contracted by the societies for purposes of operation were about 2,400,000 
marks; besides there were mortgages to the amount of about 1,800,000 marks; the 
reserves equaled 500,000 marks. The loans were equal to about 30 marks per mem¬ 
ber, the mortgages to 22 marks, and the reserves to 6 marks. The real estate of the 
societies was estimated to be equal to about 3,700,000 marks. 

The cooperative societies in general sell their articles at the ordinary market prices, 
though as a rule somewhat cheaper than in private shops. At the end of the year the 
profit is paid to the members in the form of a dividend, which generally varies from 
8 to 15 per cent. This represents approximately the degree to which the societies 
reduce the necessaries of life. 

Among the entire number of members, the great majority, in all about 67,000, were 
workmen, the remainder independent artisans, etc. 

The Bavarian cooperatives societies are included in the Association of South Ger¬ 
man Cooperative Societies. 

The association inspects the accounts of the societies which are its members, and in 
general promotes the interests of cooperative association. 

One of the chief advantages of cooperative association is to afford a means of regulat¬ 
ing prices in case the prices of retail dealers become excessively high. 

The relation between cooperative societies and private dealers are characterized 
by a certain hostility. This refers both to retail and wholesale dealers, since the latter 
are resorted to only to a limited extent by cooperative societies in buying goods. A 
number of petitions demanding that cooperative societies be subjected to high taxa¬ 
tion give expression to their relations. 

The goods sold by the cooperative societies are chiefly victuals and coal; in some 
cases also textiles, etc. 

Large industrial establishments sometimes formed cooperative societies for their 
employees, but the administration of these societies is controlled by the employers. 

AGRICULTURAL COOPERATIVE SOCIETIES. 

There are a number of agricultural cooperative societies in Bavaria, the chief object 
of which is to store and sell agricultural products and buy manures, machines, and all 
kinds of agricultural implements, seeds, etc. Ordinary necessaries are excluded. 
Some have limited, others unlimited responsibility. 


COOPERATION AND COST OF LIVING. 


49 


The working capital is obtained partly in the form of shares by which the members 
participate in the society, partly in the form of loans granted by the cooperative loan 
bank at Munich or other cooperative loan societies or banks. The rate is generally 
3£ to 4 per cent. 

The Munich cooperative loan bank referred to has a number of examining stations 
for artificial manures, fodder, etc. The bank also supplies agricultural storage and 
selling societies with the information necessary to prevent them from selling or buying 
articles at the wrong time. 

One of the chief objects of these societies is to procure good sowing material and live 
stock adapted best for each special region for their members, and to acquaint the 
farmers with the desires of consumers; they, moreover, enable a more profitable sale 
of grain delivered in various qualities or small, unassorted lots. In most cases the 
prices obtained are higher than those of the single peasant. 

In many cases the societies entrust small business men in the country towns with 
the sale of manure, machines, etc., by allowing them a small commission. 

On the whole it seems that small dealers in country towns are not damaged consid¬ 
erably by the competition of cooperative agricultural associations. The diminishing 
of the sale of some articles seems to be made up for by the increased sale of others in 
consequence of the greater prosperity of the farming population. Peasants who buy 
their manures, implements, etc., from the cooperative societies no longer resort to the 
large towns to the same extent as before. 

The agricultural cooperative associations in Bavaria are freed from income and 
business tax, but have to buy land, house, and capital income tax, as the Government 
considers it not to be in the interest of private business men if cooperative associations 
acquire considerable property in the form of real estate, etc. 

Among the cooperative agricultural associations the cooperative business associa¬ 
tion of the Society of Christian Farmers may be mentioned as an example. It disposes 
of 22 storage houses, besides it sells its articles in 106 places (in the shops of ordinary 
dealers). It buys and sells cereals, seeds, machines, coal, building articles, and 
artificial manures for its members. At Regensburg and Wuerzburg it maintains two 
large permanent sales exhibitions of agricultural machines supplied by about 30 
different manufacturers. About 3,000 machines are sold annually. The exhibitions 
have the advantage of showing to farmers the machines of different manufacturers, side 
by side. The total sales of the association are equal to over 12,000 car loads per 
annum. 

The profits of the association are, however, not turned over to the individual mem¬ 
bers with the exception of 5 per cent interest on the shares. One of the chief objects 
for which the gains are devoted is to promote or maintain agricultural schools, to assist 
poor farmers in frequenting them, to provide household courses for the daughters of 
its members. It gives advices to farmers on all questions of agriculture, procures 
farm laborers, etc. 

A. SCHLESINGER, 

Vice and Deputy Consul General. 


AIX LA CHAPELLE. 

Report on Cooperation and the Cost of Living. 

[Special Instruction No. 66, dated October 12,1911. File No. 165060.) 

There are two cooperative societies in Aix-la-Chapelle, the “Beamten Haushaltungs 
Verein” and the “Allgemeiner Konsum Verein.” They sell to their members gro¬ 
ceries, oil, small kitchen and household articles, and the like. 

The Beamten Haushaltungs Verein has 750 members, who are Government, State, 
and city officials, business men, clerks, physicians, etc, and Government and city 
workingmen. 

Factory workingmen and common laborers are not admitted. 

The entrance fee is 12 cents as a payment to the reserve fund, and $4.76 as business 
member, on which no interest is paid. 

Three per cent is guaranteed to the members yearly on the amount for which they 
bought goods; last year they gave 8 per cent. 

The standing of the society with the other merchants and dealers in the same line 
is generally good; this society buys from the wholesale dealers in Aix la Chapelle 
or direct from the producers or factory, according to the kind of goods. 

The goods they sell are of first-class quality, and sold at regular prices, not cheaper 
than in other shops. Goods must be always paid for in cash. 

H. Doc. 833, 62-2-4 




50 


COOPERATION' AND COST OF LIVING. 


The society has one shop with their office and storerooms; goods can also be ordered 
by telephone and are sent to the house. 

The office work is honorary and is done by the members of the board of directors in 
their free time, as the government and city officials have their fixed free days or 
afternoon. 

I inclose their statutes and last yearly report, which shows that their net profit 
amounted to about $1,159. 

For workingmen there exists at present only one society and this only for Social 
Democrats, the “Allgemeiner Konsum Verein.” 

There are two parties of workingmen in Aix la C'hapelle, as is usual in Germany, 
the Social Democrats and the Christian Workingmen’s Corporation. 

The Konsum Verein of the Christian Workingmen’s Corporation was broken up, as 
it was badly managed; the chief reason was that the members borrowed too much. 

But now, since everything has become so very dear, the Christian Workingmen’s 
Corporation has bought large quantities of peas, beans, lentils, and rice to assist their 
members and give them good quality at wholesale prices; within the last four weeks 
they sold over 10,000 pounds of goods; they have also erected a selling place for fresh 
sea fish, which they sell also at wholesale price. They told me that they are going to 
form a new Konsum Verein. 

The Allgemeiner Konsum Verein is only for Social Democrats; it has 956 members; 
in becoming a member of the Konsum Verein they have to pay as business member 
$7.14; it is not necessary for them to pay the $7.14 in one sum; about $0.24 is paid 
directly, $1.50 must be paid within the first six months; the rest is paid horn the per¬ 
centage they get at the end of the year; after the full sum is paid they get 4 per cent 
from it yearly; they can take more shares, but not more than 10. 

Last year they paid 6 per cent back to their members on the amount for which they 
had bought goods. 

I inclose their statutes and last yearly report 1910-11. 

The society has two shops in Aix la Chapelle; goods are not sent to the house and 
everything must be paid cash. 

They buy most of their goods from the Konsum Verein Co. (Ltd.), Hamburg, in the 
hands of the Social Democrats at Hamburg, which is the headquarters of the Social 
Democrats in Germany, and where all the social Konsum Vereine in Germany get their 
goods; only the goods which are not to be had in Hamburg are bought direct from the 
producers or the factories. 

There are consumers’ unions in all the little cities of this consular district, erected 
by the big industrial works for the benefit of their employees, by the workingmen 
associations, or the Government and private officials, on the same general conditions 
as those described in this report. 

These are good unions, especially for the workingmen; he has to paycash and can 
not make debts, and it is a kind of saving and he gets good articles. 

(Signed) Pendleton. 

Pendleton King, Consul. 

Aix la Chapelle, Germany, 

December 6, 1911 . 


BARMEN. 

Cooperation and the Cost of Living. 

The cooperative societies in Rhineland and Westfalen have made rapid progress for 
the past few years. According to the latest statistics, there are in these two Provinces 
460 so-called Konsum Vereine (cooperative societies), 83 of which are in the Government 
district of Dusseldorf. These societies include societies for private plants or large 
factories and also thoseof a more national character, like the so-called “Beamten verein.” 

The two largest societies are situated at Essen, i. e., the Krupp Society and the 
Workmen’s Cooperative Society “Eintracht.” Krupp’s has 95 stores, in which they 
sell meat, bread, wine, groceries and hardware, dry goods and shoes, and, further, 32 
distributing places for potatoes, coal, straw, and ice, 13 restaurants, 11 beer saloons, and 
3 coffee houses. They have sold goods in the past year to the value of 30,000,000 
marks ($7,140,000) and employ 1,378 persons in the production and sale of their various 
supplies. The Krupp Society does not confine its operations to Essen, but in all the 
different places where branches of this great industrial plant are situated. 

The Peoples Cooperative Society (Burger Verein) “Eintracht,” founded in 1902, 
was the first to solve the problem of provincial necessity. It has branch establish- 



COOPERATION AND COST OF LIVING. 


51 


ments in 20 different cities, 5 of which possess a population of over 100,000 inhabitants. 
In their 80 stores they have an annual sale of 6,000,000 marks ($1,428,000) worth of 
goods, and 600 people are employed. In Essen are also the following cooperative 
societies: “ Konsumverein Wohlfarts,’’ founded by organized Christian workmen, 
and the Clerks Society (Beampten Verein). Other large societies are the Society 
“Vorwarts” (Forward) of Barmen, doing a business of 4,500,000 marks ($1,071,000); 
the Producing Society “ Befreiung” (Freedom), of Elberfeld, with a business of 3,000,000 
marks ($714,000); the Universal (Allegemeine), of Dusseldorf; the Agreement 
(Einigkeit) Society, of Remsheid; and the Society of Dortmund and Hamm (Kon- 
sum und Sparverein Dortmund-Hamm) each doing a business of 2,000,000 marks 
($476,000) a year. 

Nearly every cooperative society of importance not only sell goods, but in many 
cases produce much of them, among; these being bakeries, coffee roasting, slaughter¬ 
houses, and dairies; the Biirgerverein of Essen possessing a place for the fattening 
of hogs, poultry, etc. 

Geo. Eugene Eager, 

American Consul. 

American Consulate, 

Barmen, Germany, February 27, 1912. 


Cooperative Associations of Barmen Butchers. 

Besides the numerous cooperative societies for supplying all kinds of food, clothing, 
fuel, etc., to its members, there exist others, organized for the benefit of certain guilds 
or trades. The butchers of the city of Barmen have formed three such cooperative 
societies, all of which are for their general benefit and composed of members of their 
own guild. The most important of these three societies is the “Bergische Talg- 
schmelze” G. m. b. H. (Mountain Tallow Malting Co. (Ltd.)). This section of Prussia 
is known as the Bergische (mountainous) land, and from this local term the society 
takes its name. Its by-laws are as follows: 

BERGISCHE TALGSCHMELZE G. M. B. H. 

1. A. Name, location, and objects of society. —The society is named Bergische Talg- 
schmelze G. m. b. H. (limited incorporation) and is located in Barmen. The object 
of the society is the utilization of raw tallow. Membership in this society is not 
entirely confined to members of the Barmen Butchers’ Association. 

2. B. Admittance and resignation of members. —All butchers in good standing of 
Barmen and the surrounding towns are eligible to membership. The widows of 
butchers are also admitted. 

3. Upon making application for membership the applicant must sign a form of con¬ 
tract by which he obligates himself to assume his share of the obligations of the society 
to the amount of stock he holds. After he has been admitted to membership by the 
governing board, this contract is presented to the law courts where it is registered, 
making him a member of the society and entitling him to participate in all of its 
benefits. Under the rules of the society he is obliged to deliver to the society all 
crude tallow taken from animals slaughtered by him, with the exception of such 
tallow as he may dispose of in his own retail store. All members not complying with 
this rule are subject to a fine of 50 marks and also liable to loss of membership. 

4. Termination of membership. —(1) On the resignation of a member, which must be 
presented six months before the termination of the business year. 

(2) By death, in which case the deceased’s membership terminates at the close of 
the business year. During this interim his heirs are entitled to representation at all 
meetings and in case of several heirs they may delegate one to vote in their behalf. 

(3) By expulsion. A member may be expelled for the following: 

a. If he disobeys the rules and regulations of the society. 

b. If he performs any act injurious to the interests of the society. 

c. If he becomes bankrupt. 

d. If he loses his rights as a citizen. 

Expulsion of a member is determined by the governing board, who, through its chair¬ 
man, immediately notifies him by registered letter, upon which receipt he ceases to 
be a member and at the same time forfeits all rights to the funds of the society. 

5. C. Stock shares. —Every member must subscribe to at least one share of stock, 
the value of which is 100 marks. No member is permitted to hold more than 20 such 
shares. 



52 


COOPERATION AND COST OF LIVING. 


6. 7). Limit of liability. —As the company is a limited company, each member is 
only liable to the extent of the number of shares of stock he holds. 

7. E. Working capital. —(1) Consists of all moneys received from the sale of the 
society’s shares to its members. Also by the writing off of a certain percentage of the 
yearly profits for the society’s reserve fund. * 

(2) Also all borrowed funds sufficient to the possible expansion of the business. 

8. F. Organization of the society. —The society is governed by the following: 

(1) Committee of business managers. 

(2) Supervising board. 

(3) General assembly. 

9. Committee of business managers. —(1) This committee consists of three members 
who are nominated by the supervisory board and elected by the general assembly only 
by an absolute majority and for a period not longer than three years. They may be 
reelected at the end of their term. These reelections are so arranged that the retire¬ 
ment of the members does not take place at the same time. In case a member is not 
reelected the board nominates other candidates. The board also has the right to 
renominate a person who has been rejected by the general assembly. In case the 
ballot is a tie the vote is settled by drawing numbers. 

10. In case a member of the business committee resigns before the end of his term, 
a meeting of the general assembly will be called unless a regular meeting is due within 
six weeks. 

11. One of the managers shall receive a regular salary, which shall be determined and 
contracted for by the supervisory board. The other two members shall receive no 
salary unless otherwise provided for by the general assembly. 

12. The business committee is expected to exercise the most careful judgment in 
the control of the society’s business and is in duty bound to obey the by-laws of the 
society and the orders of the supervisory board and general assembly. 

13. Members of the business committee are responsible to the society for any injury 
or loss thay may cause the society. 

14. Signatures of two members of the business committee are necessary for legal 
documents and other papers of the society. The two members should sign their 
respective names under the name of the society. 

15. Board of supervisors. —(2) The board of supervisors consists of nine members. 
They are elected at the general assembly for a term of three years, in the same manner 
as the members of the committee. Three members resign every year, but can be 
reelected. The board of supervisors choose among themselves their presiding officer 
and his substitute, also a secretary. The board of supervisors is allowed to make 
resolutions if at least three members are present. 

16. The board of supervisors is expected to perform its duty with the utmost care. 

17. The board of supervisors has to oversee the management of the business com¬ 
mittee, and has the right at any time to demand reports from the committee. The 
supervising board will examine and audit the yearly accounts and the proposals as 
to the division of the profits or losses and will report thereupon to the general assembly 
before the final balance is approved. 

18. The board of supervisors has the right to suspend members of the business com¬ 
mittee and to temporarily take charge of the business of the society, if in so doing they 
can enhance the interests. This may continue until regulated by a meeting of the 
general assembly. 

19. In the following cases the actions of the business committee must have the 
sanction and approval of the board of supervisors: 

(1) For the buying or selling of machinery or furnishings with a value of more than 
500 marks. 

(2) For making bank arrangements or borrowing money. 

(3) For making long time rental contracts. 

(4) For establishing the reserve fund. 

20. The general assembly is called together by the business committee, but in case 
of delay, or other extraordinary cases mentioned in the statutes, the supervisory board 
may act. 

21. Invitations To the general assembly are issued in printed form, giving date and 
order of business, and must be made at least one week in advance. 

22. The order of business at the general assembly includes the following: 

(1) Discussion of the year’s accounts and balance and the division of profit and loss. 

(2) Changing or adding to the by-laws. 

(3) Dissolution and liquidation of the society. 

(4) Election of business committee and supervisory board. 

(5) Discharge of the business commission for management. 


COOPERATION AND COST OF LIVING. 


53 


23. An extra session of the general assembly is called— 

(1) When the interests of the society make it necessary. 

(2) When one-tenth of the members of the society demand a special meeting which 
must be made by letter to the supervisory board, stating objects and reasons for the 
meeting. 

24. All resolutions adopted by the general assembly must have passed by an abso¬ 
lute majority of votes, unless the statutes of the society call for a special vote. 

Resolutions for the alteration or extension of the statutes expelling of the business 
committee, supervisory board of members of the society are only legal when passed 
by a three-fourths vote of the general assembly. 

25. G. Publications. —All publications concerning the society are made under the 
auspices of Bergische Talgschmelze G. m. b. H. and are signed by two members of the 
business committee. 

. 26. Invitations to the general assembly, if made by the supervisory board, are 
signed by the chairman of that board as follows: 

“The Board of Supervisors of the Barmen Talgschmelze G. m. b. H. by the chair¬ 
man.” 

27. All publications are made above the society’s name, signed by two members 
of the business committee or by the chairman of the board of supervisors, in the 
11 Barmen Zeitung. ’ ’ 

28. Auditing of accounts and the dividing of the 'profits. —The business year is the 
calendar year. The first business year began on April 15, 1903, and terminated 
December 31, 1903. The complete yearly accounts are to be submitted to the board 
of supervisors by the committee not later than February 15, which board will return 
the accounts to the committee by the end of February. The committee will there¬ 
upon call the general assembly for the middle of March. The accounts must contain 
an account of the year’s receipts and expenses, must also contain an account of profits 
and losses, and the balance at the close of the year. Partly good claims should be 
entered in the ledger at their probable value, and such claims which can not be col¬ 
lected should not be entered. The division of profits is subject to the following rules: 

Five per cent of the profits is added to the reserve funds until this fund amounts 
to 10,000 marks. The balance is divided among the members in accordance to the 
amount of tallow delivered by them. 

29. Insolvency and liquidation. —Insolvency of the society takes place when— 

(1) The society becomes bankrupt. 

(2) By order of the courts if the number of members does not exceed seven. 

(3) By resolution of the board of supervisors (paragraph 81 of the laws of the society ). 

30. If after liquidation there remains a surplus, the same is to be divided in accord¬ 
ance with paragraph 22 among the members. 

31. Liquidation can be decided upon at a special meeting of the general assembly 
by all members of the committee. 


Statutes of the Society for the Auction of Hides. 

The second in importance of the outgrowths of the Barmen Butchers’ Association is 
the Society for the Auction of Hides. 

I. OBJECT OF THE SOCIETY. 

The object of the society is to sell by auction to the highest bidder, with permission 
of the general commission, such hides as have been delivered to the society by the 
members thereof. 

II. MEMBERSHIP. 

Every member of the Barmen Butchers’ Association is obliged to become a member 
of the Society for the Auction of Hides. The entrance fee for each member is 10 
marks, and he is also obliged to pay a tax of 1 pfennig per pound for the salting of the 
hides delivered by him. The business commission has the power to admit members 
who reside outside of the city of Barmen, who are not members of the Barmen Butchers’ 
Association. The entrance fee for these nonresident members is 20 marks, and an 
additional tax of 1£ pfennigs per pound for the first year and one-half pfennig per 
pound for the following years is also charged for the salting of hides delivered. All 
purchasers of hides are also obliged to pay a tax of 1 pfennig per pound for salting. 
This tax is expected to pay the running expenses of the society. 



54 


COOPERATION AND COST OF LIVING. 


HI. MANAGEMENT. 

For the management of the society a business commission of five members is elected, 
three of which must also be on the committee of the Barmen Butchers’ Association. 
Members are elected for the term of six years. After three years three members are 
obliged to resign. A lottery containing two winning and three losing tickets is held, 
each member of the committee drawing one. The three losers resign, but are eligible 
to immediate reelection. This committee elects a chairman from among its members, 
and has the power to conduct the business of the society and to make all necessary 
purchases. It is especially allowed that when the tax for the salting of hides is not 
sufficient to cover the running expenses of the society they supply the deficiency by 
subtracting a sufficient sum from the auction bill. 

IV. DUTIES AND RIGHTS OF MEMBERS. 

Every member of the society is obliged to deliver all hides and skins of animals 
slaughtered by him to the society’s warehouse for auction. Should any member 
dispose of them otherwise he will be subject to a penalty of 20 marks for each and every 
hide or skin disposed contrary to the statutes of the society. It is also prohibited for 
any member to deliver any hides or skins for auction which are not taken from animals 
slaughtered by him. Disobedience of this statute is also punishable by a penalty of 
20 marks. Should a member and a nonmember slaughter any animals in combination, 
a charge of one-half pfennig is made for the salting of the hides. 

v. 

Upon the request of a member in good standing the sum equal to two-thirds of the 
value of the hides and skins will be advanced to him in the form of an order, which 
he will present to the society’s cashier, who will give him a check therefor. This 
payment will be considered cash on account, and the usual bank rate of interest will 
be charged until the hides are disposed of. 


For the purpose of founding a reserve fund, from January 1, 1907, every resident 
member of the society will be obliged to donate 1 per cent from the amount of sales of 
his hides auctioned by the society, the same to be deposited in some local bank. This 
taxation will be continued until the fund reaches the amount of 40,000 marks ($9,520). 
A separate account will be kept for every member in which the exact amount paid 
by him will be posted. Members joining the society subsequently will be obliged to 
pay an amount toward this fund equal to members belonging to the society at the above 
given date. If a member dies or wishes to resign on account of retiring from business 
his successor in business receives his share of the money already paid in. 

VII. 

Nonresident members can not vote and have no claim toward the fund of the society. 
Members who do not comply with the rules and regulations of the Barmen Butchers’ 
Association will be expelled from the society. 

VIII. RESIGNATIONS. 

Resignations from the Society for the Auction of Hides is governed by the society’s 
regulations, paragraph 17. 

IX. EXPULSION. 

The expulsion of a member not a member of the Barmen Butchers’ Association is 
done in accordance with paragraph 18 of the statutes of the Society for the Auction 
of Hides. 


X. ELECTIONS. 

Elections take place in accordance with the regulations of the Society for the 
Auction of Hides. 


COOPEBATION AND COST OF LIVING. 


55 


XI. 

Alterations of the statutes or the dissolving of the society will be in accordance with 
the regulations of the Barmen Butchers’ Association. 

RULES AND REGULATIONS. 

In order to make a good reputation for the society the members are obliged to strictly 
comply with the following and all other rules and regulations that may be issued in 
future. 

All hides and skins must be delivered for auction immediately after slaughtering. 
Before, during, and after the slaughtering the greatest care must be taken for clean¬ 
liness and that the hides and skins do not fall into blood, dirt, or water. Blood and 
dirt cause salt spots and injure the quality of the hides. Hides offered for delivery 
may retain the horns, together with such small portions of the skull as are unavoidable, 
but without the bone containing the tail. The skins must be cleaned of fat, flesh, 
and muscles, and all such substances must be removed before weighing. Every skin 
should be delivered “hair-drv;” wet skins will be dried in the drying room before 
weighing. A certain sum will be subtracted for dung adhering to them. For every 
skin not sufficiently “beaten out” 50 pfennigs will be subtracted from the auction 
bill, together with all other such expenses that accrue in properly preparing the skins 
for the auction. Injured hides are assorted and sold separately. The handling of 
calf and sheep skins is done in a similar way; special care is to be taken that the edges 
of the skins are cut straight. Calfskins which are delivered without heads should not 
be cut short, but severed from the head just below the ears. If the calves are left in 
the skin after slaughtering until used, care should be taken that parts of the meat are 
not removed before the rest; otherwise the skin when tanned will be spotty. Skins 
with dry spots are soaked by the society at the risk of the deliverer. In most cases 
skins which have been soaked become dull. Skins with holes caused by hooks will 
be regarded as injured. For each hole a penalty of 1 mark is deducted. One mark 
is also deducted for each dull skin. All calf and sheep skins delivered for auction 
must bear the mark of the owner on the prescribed place. For every calf or sheep 
skin delivered without mark of the owner a penalty of 50 pfennigs will be charged. 
Calf and sheep skins which have been drawn over the ground and in consequence of 
which have become dirty will not be accepted. All complaints regarding the assort¬ 
ing of the hides and skins are to be made only at the office of the society. The work¬ 
men at the hide warehouse are especially instructed to reject all complaints made to 
them. Complaints which are not made within one week after delivery will receive 
no consideration. Should skins of a like quality be auctioned at different prices the 
deliverer will be paid an average price. 

DEPARTMENT FOR THE UTILIZATION OF SCRAPS AND REFUSE. 

This department is specially organized for the utilization of all refuse and scraps 
not usable for food. It buys all the viscera, hoofs, bones, hair and bristles, blood, etc., 
from the butchers, converting them by means of expert methods and selling the 
products after modern business methods. The profits of this department, amounting 
to about 9,000 to 10,000 marks a year ($2,142 to $2,380), are devoted to the following 
objects: 

a. Finnen ( tape-ivorm bacilli ) fund .—When by means of inspection a carcass is found 
to contain sufficient finnen germs to render it unfit for sale as prime quality meat it 
is thoroughly cooked and sold for just what it is at a greatly reduced price. In such 
cases the actual loss between what this meat brings and what the butcher originally 
paid for it is made up to him out of this fund. 

b. Journeymen butchers’ fund .—This fund is for the purpose of giving light assist¬ 
ance to butchers who have learned their trade and are seeking employment and 
whose papers are in order. 

c. Old age and invalid pension.— Each master butcher who has passed the age of 
60 years and has been a member of the Barmen Butchers’ Association for 25 years, and 
who has delivered all the refuse and scraps from his slaughtering for 15 years, is enti¬ 
tled to an annuity, the amount of which is fixed by the management of the association. 

d. Burial fund .—Upon the death of a master butcher or his wife 500 marks ($119) 
is paid to his family or his heirs for burial purposes. 

e. Sick fund. —According to German insurance laws every workman is obliged to 
pay a certain small portion of his weekly wages for sick-fund benefit and his employer 
is also obliged to contribute toward this fund. In this society (Barmen Butchers’ 
Association), which contains a membership of 170 master butchers and 320 assistants 


56 


COOPERATION" AND COST OF LIVING. 


and apprentices, the masters contribute a sum for the insurance of themselves and 
the assistants and apprentices which is considerably lower than the amount usually 
paid by business employers, and the balance, which is usually contributed by the 
workmen, is made up out of the profits of this Department for the Utilization of Scraps 
and Refuse. 


The “Bergische Talgschmelze ” Society makes no profit, but returns to the butchers 
the full market value of the tallow delivered. It is impossible to give the exact 
turnover of this department, but it may be roughly estimated at 400,000 marks ($95,200) 
yearly. 

The Society for the Auction of Hides by its rules obliges every member to contribute 
1 per cent from the amount he receives from the auctioning of his hides to a reserve 
fund, which is limited to 40,000 marks ($9,520). This fund has now reached the sum 
of 30,000 marks. The society prepares its hides and bundles them ready for market 
and holds six auction sales yearly. This reserve fund may be drawn upon by the 
members in cases where their skins have not been sold by auction. This department 
does an actual business of 500,000 marks. 

(Signed) Geo. Eugene Eager, 

American Consulate, American Consul. 

Barmen , Germany , March 19, 1912. 


BRESLAU. 

Breslau Grocers’ Cooperative Association. 

The Ein- und Verkaufsgenossenschaft Breslauer Kolonialwarenhaendler has just 
completed the tenth year of its existence and claims to be the most important retail 
grocers’ association in Germany. It buys from producers direct, or from wholesalers 
when they can offer attractive prices, as, for example, when they have stocked largely 
before a rise in price. The members have credit with the association to the amount 
of participating shares they own, each share costing 250 marks ($59.50). Beyond this 
spot cash must be paid, a method that in 1911 made possible for the society to secure 
in discounts the sum of 36,116 marks ($8,595.61). 

The purpose of the society is to enable retail grocers to procure their stock of goods 
from one central point without delay and at the most advantageous prices. By 
buying for cash in large quantities ana at favorable times it is in a position to fulfill 
its purpose if the members give their support. The society claims also to be a safe¬ 
guard against careless buying, for not seldom a grocer will be imprudent in giving 
orders to a zealous traveling salesman, by overstocking in various lines or exceeding 
his ability to pay. 

The society numbered at the end of the calendar year 382 members, owning 1,500 
business shares, with a total value of 375,000 marks ($89,250), an increase of 12 mem¬ 
bers and 76 shares since the year began. Several purchasing societies in the province 
are also members. It operates its own bakery, mineral-water factory, coffee-roasting 
establishment, and wine and spirit department. The sales in 1911 are compared 
with those of 1910 in the following table: 



1911 

1910 

Groceries. 

Marks. 

3,251,019 

1,185,688 

130,639 

73,494 

Dollars. 
773,742 
282,194 
31,092 
17,492 

Dollars. 

692,137 

280,193 

23,592 

14,140 

Bread. 

Wine and spirits. 

Seltzers, etc.. 

Total sales.. 

4,640,840 

1,104,520 

1,010,062 



From the next it appears that many members do not supply their needs entirely 
through the society. Of the members last year: 

Seventy-nine bought for no more than 5,000 marks ($1,190). 

Ninety-six bought for from 5,000 to 10,000 marks ($2,380). 

One hundred and thirty-three bought for from 10,000 to 20,000 marks ($4,760). 
Thirty-six bought for from 20,000 to 30,000 marks ($7,140). 

Fourteen bought for from 30,000 to 40,000 marks ($9,520). 
















COOPERATION AND COST OF LIVING. 


57 


Eight bought for over 40,000 marks. 

The society employs a manager, 34 mercantile officers, 56 persons in the producing 
departments, and 34 drivers and janitors. Its stables comprise 27 wagons and 33 
horses. 

. Business relations are maintained with the Central Cooperative Purchasing Society 
in Berlin (Zentral-Einkaufs-Genossenschaft). 

Victoria Transportation Association of Independent Boatmen. 

The Victoria Transportgeschaeft selbstfahrender Schiffer was founded in 1898 and 
has a membership of about 600, which was about three-fifths of all the independent 
boatmen who stop at Breslau on their Oder River voyages. Any independent boat 
owner and skipper is eligible to membership, provided he owns not more than two 
boats and is a German citizen of good standing. A participating share costs 25 marks 
($5.95), but he may possess not more than five shares. 

The activities of the organization are confined to the freight business on the Oder 
River and connecting waterways, but are not limited to members alone, although 
preference must be given to them in providing cargoes. Its aim is to make uniform 
and satisfactory freight rates, to prevent injurious competition, and to minimize the 
time for obtaining and dispatching freight. Every member is bound to report at the 
office immediately after arrival in Breslau, whether with empty or laden barge. 
Firms shipping by water apply to the officials, who complete the boatman’s cargo, 
thus sparing him the trouble and delay of looking up individual shippers. 

The statutes of the society provide for— 

(a) General meetings of members (regular—in January—and called); 

( b) An executive council of five members elected at the general meeting; 

(c) Two salaried executive officers. 

The disposition of the net annual profits, after applying 10 per cent toward the 
reserve fund until it shall reach 30,000 marks ($7,140), is left to the decision of the 
members in the general meeting. 

(Signed) Herman L. Spahr, Consul. 

American Consulate, 

Breslau , Germany, February 29, 1912. 


Cooperative Societies in Silesia. 

The Province of Silesia has not been behind hand in the organization of cooperative 
societies of various kinds. Besides the loan and savings societies, the buying and 
selling organizations of wholesalers and retailers, etc., many associations of consumers 
are in full bloom and prosperous. Two representative societies of Breslau have been 
described for the combined report of the consul general at Berlin; one, the Cooperative 
Society of Breslau Grocers, is typical of the buying and selling organizations; the other, 
the Transportation Association of Independent Boatmen, is an interesting example 
of an uncommon line of endeavor. 

The consumers’ societies as a rule are founded on the principles promulgated by the 
father of German cooperation, Dr. Schulze-Delitzsch, and are opposed to the so-called 
“Hamburg tendency,” which permits the establishment of cooperative societies 
without proof of economic necessity and has no objection to class organizations with 
political affiliations. Nineteen Silesian societies, faithful to the Schulze-Delitzsch 
fundamental principle of cooperation for the common welfare irrespective of class, 
belong to the Association of Silesian Consumers’ Societies and to the General Associa¬ 
tion of German Cooperative Societies. 

All of the 19 handle groceries and household necessaries, several sell shoes, or dry 
goods, or clothing, or hardware. Three operate bakeries and one a butcher shop. 
The membership of the smallest is about 500, of the largest, over 3,000 (not counting 
the Breslau society, which is five times as large as the other 18 combined). 

The principal opposition to cooperative selling societies is found among the retailers, 
very naturally. For instance, the Association of German Hardware Dealers (44 years 
old," with over 3,000 members) regards as one of its most important tasks “the fight 
against three categories of enemies to the retail trade,” and names in the first category 
“the consumers’ associations and the agricultural and artisan purchasing societies, 
which seek to eliminate the middlemen.” (The second class includes mail-order 
houses and manufacturers who deal directly with the consumer; the third embraces 
department stores, bazaars, and the like.) 

A consumers’ society composed of workingmen of Breslau was organized in 1909 
under the name of Vorwaerts. Its by-laws are similar in most respects to those of the 


‘58 


COOPERATION AND COST OF LIVING. 


Breslauer Consum-Verein. The notices and reports of the society are made public 
through the Volkswacht, a Social democratic paper. Having been in existence only 
three years, it is still of very modest size. 

The following trades are among those that have a purchasing society in Breslau: 
Stationers, blacksmiths, druggists, innkeepers, tailors, liverymen, carpenters, grocers, 
and farmers. 

No report on cooperative societies would be complete without special reference to 
the 

BRESLAUER CONSUM-VEREIN, 

the largest association of consumers on the continent. It alone would entitle Breslau 
to adopt as slogan the name “The Cooperative City; ” for on January 1 its membership 
list embraced 95,733 names out of a population in its territory (Breslau and suburbs) 
of approximately 540,000. Counting four persons to a family, we find in a city of 
135,000 families only 39,267 families not enjoying the benefits of the society; or if five 
persons constitute the average family, only 12,267 out of 108,000 families are not 
members. An estimate made in 1909 to cover all consumers’, buying and selling, 
and loan and savings associations—considering four persons to a family a fair average 
because many belong to two or more societies—placed the figures as follows: Average 
number of members to every 250 families (1,000 inhabitants) in Germany 70, in Bres¬ 
lau and suburbs 237. 

The consumers’ association of Breslau, founded in 1866, developed with great 
rapidity, as evidenced by the comparative table following: 


Year. 

Member¬ 

ship. 

Total 

sales. 

Net 

profits. 

1866. 

420 

19,557 

31,727 

76,548 

94,260 

95,733 

$8,754 

921,505 

1,969,167 

2,968,852 

5,123,250 

5,411,215 

$412 
92,775 
225,143 
377,550 
598,357 
623,301 

1880. 

1890.. 

1900. 

1910. 

1911. 



Year. 

Refund on 
purchases. 

Members' 

credits. 

1866.'. 

Per cent. 
5.0 

$806 

1880. 

9.2 

213,820 

385,776 

871,480 

755,631 

1890.. 

10.7 

1900. 

11.5 

1910. 

11.0 

1911. 

11.0 

891,518 



Besides its central plant, the society has at present 79 sales depots (of which 6 are in 
the suburbs) and 4 coal yards. It operates the largest bakery in Germany, a dis¬ 
tillery, wine cellars, mineral-water factory, and a coffee-roasting and spice-grinding 
establishment. It has facilities for sorting coffee, packing tea, coffee, and flour for 
retail, and bottling honey, mustard, and edible oils. 

In 1911 during 305 business days the smallest amount sold in any one store was 
$22,240; the largest $113,354; the average $65,202. The purchases per member aver¬ 
aged $57, against $54 the previous year. The increase was due mainly to increase in 
membership and consumption, but partly also to higher prices of various leading 
commodities, caused by the protracted summer drought. The society employed 926 
persons, paid $79,597 in taxes, and spent $44,411 for municipal electricity, gas, water, 
coke, and wood. 

The mammoth bakery, using 33 hot-water bake ovens, each with two sliding racks, 
produced 45,861,764 pounds of rye bread (not counting that for the employees). 
The mineral-water factory disposed of 2,952,300 bottles of seltzer, soda, and lemon¬ 
ade, etc. 

About 35 bread, coffee, and bottle wagons and 15 drays are used for distributing 
goods among the stores, and 80 coal wagons for delivery to customers. About 40 horses 
do the hauling. Goods (except in wholesale quantities) are not delivered, but must 
be taken home by a member or his servant, who exhibits the membership card when 
making purchases. 





























COOPERATION AND COST OF LIVING. 


59 


MANAGEMENT. 

The sole purpose of the Breslauer Consum-Verein, as expressed in its by-laws, is to 
provide its members with unadulterated food supplies and articles for household 
consumption, of good quality and at lowest practicable prices, for cash, and to give 
them an opportunity to acquire a capital from the profits made. 

. The society’s affairs are managed by a general assembly, a board of 69 administra¬ 
tive officers, and a board of four directors. The general assembly consists of delegates 
chosen in election districts by the members for a term of three years, one delegate 
being allowed for each 150 voters. The election districts are so apportioned as to em¬ 
brace 1,000 members each. The assembly meets regularly twice a year, and occa¬ 
sionally on call. It elects the administrative hoard (increasing the number when 
necessary) and (annually) a final auditing commission of five members. These may 
all he reelected. It gives final approval to reports and accounts and to the plan of 
distributing the surplus; and it alone may amend the by-laws. It is the highest 
authority of the society. 

The terms of one-third of the administrative board expire with the year. Besides 
its officers, the board elects at least two auditors, who examine all the books of the 
society every month. It also elects the board of directors, employs or discharges 
storekeepers, handles building and property matters, makes contracts, establishes 
new sales depots, takes inventories, and (subject to the assembly’s approval) dis¬ 
tributes the surplus. The directors are four in number, elected for three years, one 
term expiring each year. They are the immediate managers of the concern. One 
member of the administrative board or of the directory is assigned to each sales depot 
for supervision and inspection. 

To become a member of the society one must buy a share at 30 marks ($7.14), pay¬ 
ing 50 pfennigs (11.9 cents) upon admission, the balance through credits for interest or 
refund on purchases or by voluntary payments. The worth of a share may be in¬ 
creased to 100 marks through interest and refunds (but not by payments). Above 
100 marks ($23.80) no interest is allowed. The share may be reduced at any time 
through withdrawals, but not 1 elow the 30 marks, nor in larger sums than 20 marks 
($4.76) without four weeks’ notice. A reserve fund equal to 15 per cent of the assets 
is provided for; it must never fall below 10 per cent. The society has also a fund to 
maintain incapacited employees or their families and to retire officials of the central 
office and plant. 

The bookkeeping includes under liabilities all debts and obligations, the share 
credits, and the reserve fund; under assets the value of the property, the cash on 
hand, the inventoried stock on hand, and claims (at collectible value). But first a 
deduction in valuation is made for wear and tear as follows: Two per cent on immov¬ 
able property, 20 per cent on livery outfit, and 10 per cent on all other movable 
property. The difference between receipts and expenditures constitutes the net 
surplus for the year, which is disposed of as follows: 

(a) Four per cent interest is paid on the shares. 

( b) The board of directors receives two-fifteenths of 1 per cent of the total sales, 
and the administritive board receives four-fifteenths of 1 per cent of the total sales. 

(c) A refund (of usually 11 per cent) is then made to the members on the amount of 
their purchases during the year. 

(d) The remainder is carried forward to the next year, except such part as may 1 e 
set aside for contemplated buildings. 

The following statement of account for 1911 may be of interest as a further evidence 
of the size of the concern: 


RECEIPTS. 


Brought over from 1910. $1,159 

Profits on sales. 068, 500 

Property rents, etc. 5, 289 

Interest on invested funds, etc. 6, 325 

Refunds disallowed or unclaimed for 1910. 3,101 

Stamp errors made good by storekeepers. 219 


984, 593 









60 


COOPERATION AND COST OF LIVING. 


EXPENDITURES. 


Salaries (central office and warehouse).-. 

Storekeepers’ percentages (including wages of clerks). 

Storekeepers’ bonuses. 

Wages of drivers, etc. 

Store rents.. 

Heat and light. 

Taxes, assessments, employees’ insurance.. 

Deduction for wear and tear._. 

Miscellaneous, including repairs, printing, fire and burglar and glass insur¬ 
ance, water, chemist, postage, forage, etc. 


$14,798 
125, 318 
1,042 
18, 636 
25, 957 
7,738 
90, 877 
30, 881 

36, 244 


351, 491 

The net profits.. 633,102 

were disposed of as provided in the statutes, as follows: 

(a) Interest on shares. $9, 731 

(£>) Percentages for the two boards... 21, 647 

( c ) 11 per cent refund on stamps. 569, 023 

( d) Set aside for building. 30, 940 

( e ) Carried over to 1912. 1, 761 


633,102 

Members receive trading stamps at the stores for every purchase (so far as divisible 
by 10 pfennigs). These are exchanged once a month or oftener for 10-mark stamps. 
The stamp books are presented in January for payment of the percentage; but during 
the year the 10-mark stamps may be cashed at a rate established from time to time by 
the administrative board, in which case no after payment is made when the annual 
refund percentage is higher. 

A member may be permitted to buy large quantities at wholesale prices if he does 
not demand trading stamps. Stamps are not issued for butter or for gas coke, nor for 
coal in loads above 5,512 pounds. All sales are for cash. Price, lists are issued 
monthly, intermediate changes being posted in the stores. 

A qualified chemist is employed, who made over 250 analyses and reports last year, 
enabling the society to give preference in buying to the best articles and to avoid 
adulterated foods. The stores are supplied once, twice, or thrice daily with butter, 
beer, bread, and roasted coffee. A further guarantee of freshness is the fact that the 
capital invested in stock is turned over more than a dozen times in a year, while the 
General Association of German Cooperative Societies recommends seven times as the 
minimum. 

Many articles are packed in the proper weights at the central plant or sold in the 
original packing. Of the 530 articles carried in stock, 412 are sold thus or by piece, 
while only 118 need to be weighed or cut at the time of purchase. This promotes 
speed in selling. To guarantee honest weights and measures the administrative 
supervisors make a weekly inspection without previous notice, while a special officer 
visits every shop daily to test weights and confirm prices. 

There is no attempt to persuade the members to buy more than they need. The 
shops are very plainly furnished, and no advertising is done. Prices are kept low by 
buying in large quantities for spot cash, by direct production, by limiting the cost of 
operation to a minimum, and by selling for cash. Prices are raised reluctantly and 
lowered gladly; the society claims to be nearly always the last to raise and usually the 
first to lower. It is an influence for good in keeping down local prices; it furnishes 
employment to over 900 persons, some of whom have been more than 20 years with the 
concern; and its publicity methods enable the city and State to be sure of full tax 
assessments. 

The society believes competition to be necessary and proper in every branch of trade, 
agriculture, and industry, and in this flourishing era of cooperation in Germany it 
prides itself on winning the thanks of the retail trade by never indulging in a slaughter 
of prices to injure competition or putting out enticing articles below cost to attract 
trade. 

In view of its enormous membership and influence the Breslauer Consum-Verein 
commands respect among all branches of trade. If instead of dealing only in food 
supplies and articles for household consumption it should, like the large society in 
Leipzig, handle textile goods, shoes, etc., the amount of business done would reach 
appalling proporiions. 

Herman L. Spahr, Consul. 

American Consulate, 

Breslau , Germany , March 15, 1912. 



















COOPERATION AND COST OF LIVING. 


61 


COLOGNE. 

Cooperation and Cost of Living. 

Cooperative societies, called in German Konsum-Genossenschaft or Verein, in 
English Consumers’ Unions, abound almost everywhere and have made unusual prog¬ 
ress during the last few years in Rhineland and Westphalia. According to the last 
statistics there are in these Provinces 460 of these vereine. They are instituted in the 
interest of all classes of consumers, but it should be said that members of different 
trades do not as a usual thing belong to the same union. Generally speaking, unions 
that sell groceries do not deal in dry goods, notions, fuel, feed, beer, or other goods, 
each having a store for its own. Among the larger unions in these two Provinces is the 
Krupp Union in Essen, with 95 stores for the sale of meat, bread, wine, fancy goods, 
groceries, maufactured articles, cutlery, shoes, and hardware; 32 stores for the sale of 
potatoes, coal, straw, ice; 11 beer halls, 13 cantines and 3 coffee houses. The annual 
sales amount to 30,000,000 marks ($7,140,000), and give employment to 1,378 persons. 

In 1892 the Workmen’s Union Concord was founded also at Essen, and now covers 
20 cities and towns, including 5 cities of over 100,000. It has 80 stores and employs 
over 600 people. Its annual sales reach over 6,000,000 marks ($1,328,000). Among 
other important unions is the “Hoffnung, ” at Cologne, which is 10 years old and had 
at the end of the first year 1,800 members and at the close of the business year 1910-11 
23,739 members. It has 54 stores, employs 321 persons, with annual sales of 5,664,467 
marks ($1,348,243), an average of 258 marks ($61.40) per member, dividend returned 
to members in goods 8 per cent annually. 

The expenses of conducting the business including the amount written off for depre¬ 
ciation, etc., was 12.7 per cent. A considerable increase in the running expense was 
caused during 1909-10 by reason of the union going into manufacture of many articles, 
notably bread, pastry, confectionery, etc., but a reduction is gradually going on, 
though the increase in the .price of rent, fuel, feed and wages continues right along. 
The membership fee is 25 marks ($4.95) and is liable to an assessment of 100 per cent. 
A reserve, insurance, and accident fund is provided. 

The feeling of other dealers toward the union is one of hostility, and every effort is 
made to secure adverse legislation from the city councils which control the kinds of 
goods these unions may deal in and to prevent them from selling to persons not mem¬ 
bers. 

All goods for the branch houses are purchased by the central management, from 
which most goods are delivered to the retail stores. In case of large deliveries or of 
heavy goods they are shipped direct to the branch stores. A wholesale house for the 
sale of goods to consumers’ unions exists in Hamburg, also on the cooperation plan, 
each union becoming a member. This wholesale house is called the “ Grosseinkaufs- 
gesellschaft deutscher Konsumvereine m. b. H., Besenbinderhof 52, Hamburg 
(Wholesale Association for German Consumers’ Unions, Ltd.). • 

In many of the associations the manufacture of many articles sold has been under¬ 
taken, and with success. The principal lines are slaughterhouses, bakeries, coffee 
roasters, dairies, etc., and one in Essen has undertaken a swine-fattening business. 

A report on this subject was made by the undersigned from Breslau in 1890. 

Respectfully submitted. 

H. J: Dunlap, Consul . 

Cologne, Germany, February 16, 1912, 


ERFURT. 

Cooperation and the Cost of Living. 

[From Consul Ralph C. Busser, Erfurt, Germany.] 

KINDS OF COOPERATIVE SOCIETIES IN ERFURT DISTRICT. 

The following kinds of cooperative societies in the Erfurt consular district are dis¬ 
cussed in this report: Consumers’ associations (consum-vereine) of petty officials, 
office and store employees, teachers, factory operatives, and other working people, for 
the combined purchasing of household supplies, the banking of savings, and the 
building of homes; and associations of retail merchants or shopkeepers for the purchase 
in common of goods and wares for distribution and resale in their respective stores. 
There are also in operation in the district other business schemes of associated activity 



62 


COOPERATION AND COST OF LIVING. 


among agricultural and industrial producers, tradesmen, and mechanics with their 
own established businesses, likewise designed to reduce the cost of production or dis¬ 
tribution of the necessaries of life and to protect themselves against the exactions of 
professional money lenders or against the practices of trusts, syndicates, and other 
capitalistic combinations which in many lines of business tend to stifle competition 
and raise prices. Among the cooperative undertakings in this district designed to 
resist this monopolistic tendency should be mentioned mutual loan associations, 
cooperative dairies, building associations, and producers’ unions for the cooperative 
purchase of raw materials or supplies, and in some cases the joint sale of their products. 
The largest and most important of such producers’ unions in this district is the Raif¬ 
feisen organization of the numerous cooperative societies of farmers, orchardists, 
dairymen, breeders, etc., the principal objects of which are the wholesale purchase of 
land, machinery, seeds, fertilizers, and other supplies, the loaning of money, and the 
joint marketing of the products of the individual members. 

The agricultural societies and consumers’ associations to reduce the cost of produc¬ 
tion and of living, respectively, are in a flourishing condition in this district, and, gen¬ 
erally speaking, the objects of their formation are being successfully accomplished. 
The organization of retail merchants, however, for the cheaper purchase of their goods 
from the factories and other sources of supply has made but little progress in this district, 
owing probably to the fact that the establishment of department stores or “universal 
providers ” and of companies for the purpose of conducting ‘ ‘ chains ” of stores, has hardly 
proceeded far enough here to interfere with the free operation of the principle of com¬ 
petition in the retail trade. In Erfurt and a few other cities of the district small 
groups of grocers and other petty tradesmen have organized cooperative purchasing 
associations, one of which is discussed in the latter part of this report. This phase of 
cooperative buying is known here only in a few branches of trade, and the business 
operations have been on a rather small scale. Among independent or self-established 
producers in this region the farmers have taken the greatest advantage of the principle 
of cooperation in conducting their business affairs. 

consumers’ associations of workmen. 

Consumers’associations (consum-vereine) exist not only in all of the cities and large 
towns of this district, but also in every rural community supported to a large extent 
by manufacturing, whether in the factories or in the houses of the workers. In other 
words, a consum-verein is found in every locality in which there is a large body of 
working people not engaged in farming. The nonagricultural workmen, clerks, 
teachers, officials, and others with fixed salaries have been the chief sufferers from the 
greatly increased cost of living in Germany, and it is to these people working for wages 
or small salaries that cooperation in buying food and household necessities has made 
it 61 strongest appeal. A very large proportion of the wage-earners in this district belong 
to th^ Social Democratic Party, one of whose policies is to encourage the formation of 
consumers’ associations to combat high prices by cooperative purchasing direct from 
farmers, manufacturers, and wholesalers. It is contended that the cost of distribution, 
which plays such an important r61e in the fixing of prices, can be materially reduced 
by eliminating the services of shopkeepers and middlemen wherever feasible, so that 
the ultimate consumer can derive the greatest possible benefit from the lower cost of 
production in many lines resulting from the scientific discoveries, substitution of 
machinery for hand labor, improved organization and management of industrial plants, 
and the multiplication and cheapening of transportation facilities, which have taken 
place in Germany during the past few decades. It is upon the above principle that 
the Social Democrats, though associated primarily for political purposes, have not been 
too dazzled by political dreams and ideals to neglect the possibilities of their homoge¬ 
neous and powerful organization for the working out of schemes of practical social 
economy outside of the realm of legislation. 

The advance of wages in most lines of business has not kept pace with the increased 
cost of living, and the workingmen have sought to lighten the family budget by the 
formation of consumers’ associations. This cooperative movement among the German 
workingmen is represented in this locality by the “Allgemeiner Consumverein fuer 
Erfurt und Umgegend, e. G. m. b. H.” (General Consumers’ Association for Erfurt 
and vicinity, registered Genossenschaft with limited liability), with a membership of 
over 3,000 at the date of writing. The specified objects are as follows: 

1. The cooperative purchase at wholesale of articles of household use and con¬ 
sumption ; 

2. The selling of such supplies at retail to the members; 

3. The preparation and manufacture of household necessities in its own industrial 
plants; 


COOPERATION' AND COST OF LIVING. 


63 


4. The receiving of the members’ savings and investment thereof for the common 
good; and 

5. The establishment of a fund for the building of homes. 

The business capital of the association is made up by the entrance fees, the payments 
upon the members’ shares in the enterprise, and the net profits of the business credited 
to the active and reserve funds. The share of each member is fixed at 30 marks ($7.20), 
which can be paid immediately upon admission or in installments within three vears. 
Until a member's share is completely paid in, the dividends or rebates to which he is 
entitled can be retained to cover his indebtedness to the capital fund. 

The administration of the affairs of the association is distributed as follows: 

1. The executive committee (Vorstand), consisting of the general manager, treas¬ 
urer. and controller, attends to the active management of the business. They are 
elected by majority vote of the members at a general meeting upon recommendation 
of the board of directors. 

2. The board of directors (Aufsichtsrat) is composed of seven members, elected by a 
majority vote at a general meeting of the association, and the board appoints from its 
members its own chairman and secretary. The board has the supervision of the 
business management in all branches of the administration, in accordance with the 
by-laws, and hence must always be informed as to the course of the administration. 

3. The ultimate power of control is lodged in the general meeting (generalversamm- 
lung), at which each member of the association has a vote which can not be transferred 
to a third person. Corporations, firms, and other organizations who are members, and 
the heirs of deceased members can only be represented by those with written power of 
attorney, and no attorney in fact can represent more than one member. 

Those admissible to membership in the association are individuals, firms, corpora¬ 
tions, and societies capable of fulfilling the duties prescribed. Membership can cease 
by voluntary withdrawal after due notice, by expulsion, by assignment of the mem¬ 
ber’s credit balance, and by death. A member can be expelled upon the following 
grounds; 

1. If he do£s not perform his duties as prescribed by the by-laws; 

2. If he has not procured from the association during the year goods to the value of 
at least 50 marks ($12); and 

3. If he has caused injury to the association or otherwise acted against its interests. 

The power of expulsion rests with the executive committee and board of directors. 

The members have the right to vote at the general meeting in all proceedings and 

elections and to submit resolutions and motions; to call general meetings in accord¬ 
ance with the provisions of the by-laws; to obtain goods from the association’s store, 
and to avail themselves of the offered opportunities to buy at the most favorable prices; 
and. in accordance with the by-laws, to claim their respective shares of the net profits 
of the business. Each member is required to pay an entrance fee of 0.50 mark (12 
centsb and the installments due on his share in the undertaking; not to act in disregard 
of the by-laws, resolutions, and interests of the association; and to be bound jointly 
for the obligations of the association to its creditors according to the provisions of the 
law governing “ Genossenschaften mit beschraenkter Haftpflicht” (cooperative 
associations with limited liability). 

The executive committee fixes the selling prices of the goods, and, as a rule, the same 
are determined by the prevailing market prices. Goods are sold only for cash. On 
October 1, 1910, the association had four retail stores in Erfurt and one each in Soem- 
merda and Gisoersleben, small towns in the vicinity; since then one additional store 
has been established in IIischleben,a near-by village, and arrangements are now being 
made for the establishment of three more, viz, two in Erfurt and one in the village of 
Gebesee. 

The sales of the above association amounted in the fiscal year of 1910-11 to 466,412 
marks ($111,939), and upon the basis of the business done so far during the present 
fiscal year it is estimated that the sales will reach the sum of 700,000 marks ($168,000), 
an increase of over 66 per cent. The interest on the securities held and on the moneys 
loaned out amounted for the last fiscal year to about $720. The association also 
received $635 as its share of the net profits of the wholesale cooperative company 
(Grosseinkaufs-Gesellschaft) in Hamburg, from which it bought during the year 
goods to the value of $60,720, or about 64 per cent of its total purchases. The goods 
not purchased from the wholesale cooperative company consisted mostly of bread, 
dairy butter, meat, and meat products, the same being procured from firms which are 
not suppliers of the wholesale cooperative company, and hence not conflicting with 
the business of the latter. 

The value of the stock on hand October 1,1911, amounted to over $13,300, an increase 
of about 40 per cent from the year before. The landed property of the association is 
valued at $18,000, subject to a mortgage of $10,000; the available funds, including bank 


64 


COOPERATION AND COST OF LIVING. 


deposits and cash on hand, $20,000; the reserve fund, $2,700; the business balance in 
favor of the members, $5,400. The active capital was raised mostly by the moneys 
deposited or invested by the members, amounting on October 1,1911, to about $25,000. 
The outstanding obligations other than the said mortgage and the sums credited to the 
members as rebates or dividends, only amounted at that time to about $135. On the 
basis of the capjtal and business of the association, the proportionate sum legally sub¬ 
ject to the claims of possible creditors then was automatically fixed at $15,600. 

In the fiscal year 1910-11 the current expenses amounted to $7,200, of which the 
chief items were as follows: 


Salaries of executive officers. $1, 037 

Salaries of stock keepers. 1, 884 

Salaries of salesladies. E 440 

Wages of helpers. 480 

Store rents. 546 

Printing. 312 

Heating and lighting. 211 

Delegations and contributions. 208 

Obligatory payments into the sick and invalid insurance fund. 146 

Cleaning and renovation of storerooms. 173 

Postage and telephone. 100 

Insurance. 94 

Newspapers. 82 

Taxes. 212 


The cost of administration in proportion to the sales for the last five fiscal years was 
as follows: 1906-7, 11.36 per cent; 1907-8, 11.9 per cent; 1908-9, 9.36 per cent; 1909-10, 
7.55 per cent; 1910-11, 6.24 per cent. That the expenses have been reduced nearly 
one-half in proportion to the sales within a period of five years is an instructive 
example of the economies effected both by increased membership and experienced 
management. 

The net profits for the last fiscal year (1910-11) amounted to over $8,640, of which 
$7,550 was declared as a dividend to the members on the basis of 7 per cent of $107,900, 
the converted cash value of the counters or coupons used by the members in payment 
of their purchases during the year; $476 was added to the reserve funds; $240 to the 
death benefit fund; $130 for expenses of the board of directors; $36 for educational 
purposes; and the balance was carried forward into the next year’s account. 

In addition to a dividend of 7 per cent, the members of the association secured the 
advantage of purchasing their household supplies, on the average, at cheaper prices 
than those charged by the independent retail dealers. Comparing the prices of the 
association with those of four grocers, large and small, located in the neighborhood of 
the cooperative stores, the differences averaged as follows: Merchant A was dearer 
8.10 per cent; Merchant B was dearer 5.82 per cent; Merchant C was dearer 11 per cent; 
Merchant D was dearer 16.23 per cent. 

Other substantial benefits of cooperative storekeeping claimed by this association 
are the avoidance of short weights, adulteration, the substitution of inferior qualities, 
and other forms of cheating or unfair dealing practiced by some retail grocers. 

As the recently enacted Prussian law taxing department stores (Warenhaus-Steuer- 
Gesetz) applies also to cooperative socities which purchase and sell to the members 
thereof goods of different classes not usually sold in the same store, the General Con¬ 
sumers’ Association for Erfurt and Vicinity, in order to avoid a tax which would 
amount this year to over $1,300, has been obliged to give up handling goods which can 
not be classed as provisions or food products. 

The growth of the cooperative movement among the working people of this locality 
is illustrated by the increase of membership in the above association from 1,507 on 
October 1, 1910, to 2,164 on October 1, 1911, a gain of about 44 per cent in one year; 
on March 1, 1912, the membership numbered 3,000. 

consumers’ association of officials and others. 

The “Erfurter Beamten-Consum-Verein, eingetragene Genossenschaft mit be- 
schraenkter Haftpflicht” (Erfurt Consumers’ Association of Officials, registered co¬ 
operative society with limited liability) is an organization somewhat similar in design, 
methods, and operation to the General Consumers’ Association for Erfurt and Vicinity 
hereinbefore discussed. The membership numbers about 275 consisting of petty 
government and business employes, teachers, and others living under similar con¬ 
ditions. The business capital is made up of the society’s assets, which consist of the 
entrance fees of the newly admitted members, the paid-in business shares of 45 marks 
















COOPERATION AND COST OF LIVING. 


65 


($10.80), and the reserve fund. The affairs are managed by an executive committee, 
board of directors, and by the members in general meeting. The reserve fund which 
serves to cover possible business losses, is made up by the entrance fees and payments 
oil the shares of members, and must be kept at 33J per cent of the assets of the associa¬ 
tion. In case the assets are not sufficient to satisfy all the obligations of the associa¬ 
tion, then in accordance with the law governing “cooperative societies with limited 
liability,” each member is liable to the extent of 150 marks ($36), and this whether 
the debts were incurred prior to or during the period of his membership. 

Sales can only be made to members for the needs of themselves and families, and 
the orders are filled either from the cooperative store or by suppliers designated by 
the association. The association makes its purchases from the producers and whole¬ 
salers, who are obliged to be well-disposed toward the association and can not dictate 
what retail prices the latter shall charge its members. In laying in stock the managers 
of the association endeavor to make the most of favorable turns in the market, so that 
the association has the advantage of contracts under which its purchases can be made 
at advantageous rates during a period of rising prices. The terms of sale to this asso¬ 
ciation are payment in cash within 30 days after date of invoice with a discount of 
1 to 4 per cent ; the packing and delivery are generally gratis. 

The retail prices fixed by the association are somewhat less than those charged by 
the independent dealers, and the writer is informed that the cost of necessaries of 
life to the members are thereby reduced from 5 to 15 per cent, varying with the par¬ 
ticular articles. It is said, however, that the advantage to the members lies chiefly 
in the annual dividend (last year 5^ per cent), based upon the net profits of the business. 

LEGISLATION ADVERSELY AFFECTING CONSUMERS’ ASSOCIATIONS. 

The rapid growth of consumers’ cooperative associations like the two above described, 
and the financial success of their schemes of cooperative buying and distribution, 
thereby materially reducing the cost of living to the members and their families, has 
naturally hurt the trade of the retail dealers in this as in other sections of Germany. 
The dealers, through the chambers of commerce and other trade organizations in 
which they are influential, from year to year by petitions to the state governments 
and otherwise, have sought to bring about the enactment of legislation designed to 
discourage and obstruct the cooperative movement among consumers of household 
necessities. Local consumers’ associations were first adversely affected by the 
Gennossenschaft law of 1896 adopted by Prussia, forbidding the cooperative stores to 
sell to nonmembers. This was followed by the department store tax law (Warenhaus- 
Steuer-Gesetz) of 1900, which operates as a tax upon the business as represented by 
the expenditure for stock, and was made to apply to consumers’ associations as well 
as to the heavily capitalized undertakings conducting a retail business in various lines 
of trade. The result is that every consumers’ association in Prussia is now forced 
either to quit handling many household necessities usually sold by retail dealers, or 
to pay a tax of 2 per cent of the value of the goods purchased by the association, the 
tax amounting to about one-fourth of the total savings to the members by such co¬ 
operative business. Consequently, the consumers’ associations located in Erfurt and 
vicinity, for example, have discontinued their cooperative buying and selling in all 
departments of business except that embracing articles of food. Consumers’ associa¬ 
tions in Prussia were further unfavorably affected by the law of 1906, subjecting them 
to the payment of an income tax on their net earnings, and this whether the sales 
were confined to members or not. 

In addition to the taxes already paid by these associations, there is now pending 
before the Prussian Parliament a new income-tax law designed to reach the discounts 
or rebates, in the shape of dividends or otherwise, to which the members are entitled 
on the basis of their yearly purchases. As these rebates represent what has been 
saved to the members by the scheme of cooperative buying, it is claimed by them 
that it is in reality a tax upon savings rather than upon income, and as such a dis¬ 
crimination against consumers’ associations, because the tax does not apply to organi¬ 
zations of retail merchants and of independently established farmers, mechanics, and 
artisans receiving discounts by cooperative buying of stock, tools, and other supplies 
in large quantities, nor to the savings of ultimate consumers represented by trading 
stamps and other forms of rebate extended by tradesmen to their cash customers. 
As the dividends or rebates payable to each member represents the amount saved by 
the cooperative purchasing of his household supplies, the proposed new tax in its 
absorption of a still larger percentage of the joint profits of the undertaking is regarded 
by the associations as a tax upon consumption, falling, as it does, indirectly upon the 
members in proportion to their purchases. Looking upon the tax as a confiscation of 

H. Doc. 833, 62-2-5 


66 


COOPERATION AND COST OF LIVING. 


the savings which poor consumers are enabled to secure only by cooperative whole¬ 
sale buying, the consumers’ associations in this vicinity are naturally very much 
agitated over the situation and are strenuously opposing the adoption of the proposed 
tax by petitions and otherwise. The cost of living is particularly affected by the 
speculation and “corners” in coffee, sugar, and certain farm products, and it is claimed 
by the local associations that they have saved their members considerable money by 
laying in heavy stocks of these necessities at opportune times. The same policy has 
also been pursued with regard to domestic food products when the prices of same by 
failure of crops or otherwise show a decided tendency to rise during the period of 
greatest need. The potato crop, for instance, was poor in this region in 1911, and 
prices steadily advanced during the past winter. Potatoes being one of the main¬ 
stays of the poor in this district, the consumers’ associations laid in a large stock of 
them early in the season before prices had greatly advanced, and the members were 
thus enabled to save considerable on the family budgets during the past winter when 
other consumers were paying the dealers’ higher prices, as determined by market 
conditions. The cooperative movement in this region has become popular with the 
wage-earning classes, who feel most keenly the increasing cost of living, and they 
naturally resent with bitterness any attempt to curtail the business activities of con¬ 
sumers’ associations or to burden them with additional taxation. 

merchants’ buying associations. 

Cooperative purchasing organizations exist not only among the farmers, clerks, and 
wage earners in this district, but also among certain classes of retail merchants like 
grocers and provision dealers whose capital and trade are too small to enable them to 
buy in large quantities direct from the factories or to take advantage of cheap cash 
prices at favorable turns in the market. Standing alone, they are ordinarily obliged 
to obtain their supplies from wholesale dealers and at prices necessarily higher on 
account of purchasing in smaller quantities, requiring credit, and paying middlemen’s 
profits. The saving in freight and delivery charges, commissions, and warehouse rent 
are also important items to be considered in summarizing the advantages of cooperative 
buying on the part of small tradesmen struggling to hold their own against the compe¬ 
tition of heavily capitalized firms or syndicates operating department stores or chains 
of retail establishments in the same locality. 

An illustration of this form of cooperative buying is the “ Einkaufs-Verein der 
Materialwaren-Haendler Erfurts” (Purchasing Association of Erfurt Grocers), founded 
about three years ago, and now consisting of 34 members. Each member has to con¬ 
tribute 50 marks ($12) in cash to the joint fund, which is used for making purchases. 
The money not so employed is kept-in the savings bank drawing interest. The man¬ 
agement is delegated to an executive committee consisting of a chairman, treasurer, 
secretary, and their substitutes, together with two examiners of accounts (revisoren). 
The association maintains no warehouse, separate office, nor salaried employees, the 
bookkeeping and other slight clerical work being performed by the officer members at 
little or no compensation, so that the expenses of administration scarcely exceed $25 
per year. 

At regular periods each member calculates the requirements of his business in the 
different lines handled, and the total quantities necessary to stock the various stores 
are jointly purchased through the association from wholesalers, importers, manufac¬ 
turers and other producers, according to circumstances. Before placing an order 
quotations are obtained from different sources of supply, and the contract is closed 
with the firm submitting the most advantageous offer. * In addition to the cheaper 
prices thus obtained, the manufacturers usually allow the association a sales commis¬ 
sion of 1 to 2 per cent upon settlement of accounts. Of course the larger the wholesale 
transactions based upon the respective requirements of the members, so much greater 
is the joint profit derived from these sales commissions or rebates. After deducting 
the expenses of the association at the end of the year, the net profits (amounting last 
year to over 1,000 marks ($240)) are divided among the members in proportion to the 
amounts of their respective purchases. 

Ralph C. Busser, Consul. 

American Consulate, 

Erfurt, Germany, March 16, 1912. 


COOPERATION AND COST OF LIVING. 


67 


HANOVER. 

Milk Producers’ Association, of Hanover. 

The association for improving the value of milk commenced operations as a corpora¬ 
tion with limited liability on June 23, 1900, in Hanover. A charge of 50 pfennigs 
($0,119) was fixed together with a sum of 5 marks ($1.15) per cow or share annually as a 
guaranty. The corporation started with 205 members owning 3,600 cows, represented 
by as many shares. 

During the years 1900 to 1912 the number of members varied as follows: 


1900. 

190] (Jan. 1) 

1902 . 

1903 . 

1904 . 

1905 . 

1906 . 

1907........ 

1908 . 

1909 . 

1910 . 

1911 . 

1912 . 


Years. 


Members. 

Shares. 

Guaranty 

sum. 



Marks. 

205 1 

3,600 

18,000 

846 

4,036 

20.180 

975 

7,901 

39,505 

1,025 

8,151 

40,755 

995 

7.962 

39,810 

855 

6,906 

34,530 

789 

6,406 

32,030 

622 

5,415 

27,075 

555 

5,144 

25,720 

519 

4,815 

24,075 

589 

5,150 

25,750 

574 

5,114 

25,570 

• 578 

5,140 

25,700 


Since its foundation 12 years age 760 owners with 6,311 shares have been members of 
the corporation. On an average, 587 members with 5,028 shares delivered about 50,280 
liters of milk to Hanover, Linden, and suburbs per day. 

Since its start in 1900, the producers have paid 50 pfennigs per share and cow. In 
addition to which they were assessed during a period of 9 years on certain months, 35 
in all, commencing in 1903, when a successful raising of price for milk had been 
brought about, as follows: 

[Value of German pfennig $0.00238.] 

In 1903, 1 month, per liter J, f, and £ pfennig contribution. 

In 1904, 6 months, per liter f, f, and J pfennig contribution. 

In 1905, 12 months, per liter f, and \ pfennig contribution. 

In 1906, 9 months, per liter J, f, and b pfennig contribution. 

In 1907, 2 months, per liter .4 pfennig contribution. 

In 1908, 1 month, per liter .4 pfennig contribution. 

In 1909, 1 month, per liter .4 pfennig contribution. 

In 1910, 1 month, per liter .4 pfennig contribution. 

In 1911, 2 months, per liter .5 pfennig contribution. Or for— 

28 months from 1903-1906, for 1 liter f, and b pfennigs. 

5 months from 1907-1910, for 1 liter .4 pfennig. 

2 months in 1911, for 1 liter .5 pfennig. 

Equal to .38 pfennig per 1 liter of milk in 35 months. 

The milk has been sold to Hanover, Linden, and suburbs. 

During the whole period of 12 years 587 members, holding 5,028 shares, have paid: 


Marks. 

First, a yearly amount of. 30, 167. 50 

Second, extra assessments during 35 months... 157, 458. 09 


or a total of 182,625.59 marks. That is, an annual contribution of 3.03 marks ($0.72) 
per cow giving 10 liters of milk, or a daily fee or charge of 0.084 pfennig per liter. 

Before the foundation of the association milk dealers or cow owners had been receiv¬ 
ing 10.5 pfennigs ($0.0238) per liter. The price rose from 1903 to 12.5 pfennigs ($0.0286) 
per liter, or an increase of 20 pfennigs per cow per day was effected, resulting in an 
increase in the value of the product of one cow of 60 marks ($14.28) per annum. 

Milk delivered at the premises of the association but not sold amounted on the 
average to 1,564 liters per day from September, 1903, to December 31, 1906, for which 
the members received a compensation of 4.42 pfennigs per liter. During a period 
of disputes from 1903-1906 the sum of 101,773.86 marks was paid out as compensation 
for 2,183,057 liters of unsold milk. 

When the price of milk rose again in 1911 no milk was brought to the premises of 
the association, and consequently no compensation had to be paid out. The chief 
reason was the extreme scarcity of milk; also the scale of compensation had been 
somewhat lowered in conformity with an alteration in the statutes of the association. 

























68 COOPERATION AND COST OF LIVING. 

The Association for the Profitable Purchase and Sale of Horses in 

Hanover. 

The association commenced itsoperations on October 1, 1908, in its buildings erected 
at Westercelle, near Celle, the premises covering 2 hectares of land. Its members 
numbered 415, holding 631 shares. The staff consisted of the manager, 1 fodder super¬ 
intendent and an accountant, 1 trainer, and 8 stablemen. From October 1 to Decem¬ 
ber 31, 1908, 41 horses were sold. The undertaking developed quite favorably. 
A number of cavalry regiments availed themselves of the association as a medium 
for the sale of their horses on the premises. The total cost of the buildings was 
about 90,000 marks. In 1909 the demand for horses both for riding and driving was 
very great. It has consequently proved necessary to keep a large number of horses 
so as to give the purchasers a better choice. As the stable accomodation was insuffi¬ 
cient for this purpose, the building was enlarged, with all the latest improvements, 
at a cost of about 50,000 marks; 67 horses can now be accomodated. The Hanoverian 
Riding Club has erected on its premises, situated near to those of the association, an 
infirmary, which was let at an annual rent; 109 horses were sold. The number of 
associates rose to 423, with 643 shares. 

Business in 1910 was unfavorably affected by the high price of fodder; 132 horses 
were sold. At the end of the year there were 427 associates with 648 shares. 

The scarcity of fodder, coupled with the excessively high prices demanded for raw 
horses (it was our constant endeavor to buy the best only), seriously interfered with 
the business in 1911. 

Notwithstanding that the number of horses changing hands increased to 111 of 
our own, 31 in board, and 108 sold through our intervention, no net profit could be 
gained. 

The number of the associates on December 31, 1911, was 430, with 651 shares. 

The following copy of a circular, disseminated at the time for the call for the organi¬ 
zation of the association, gives a complete outline of the purposes of the society. It 
is followed by a copy of the regulations and by-laws of the association. 

“ Hanover, September 25, 1908. 

“The Association for Improving the Value of Horses will commence its business 
on October 1, of this year, in the buildings which are to be ready by that date, at 
Westercelle, near Celle. The former proprietor of the Hanoverian Tattersall, at 
Hanover, Kohler, has been appointed manager. The business operations will be 
of two kinds, consisting in:*(l) The purchase, training, and improvement of the 
horses for the account of the association; and (2) stabling and feeding horses with a 
view to their training and sales, or for training only, or for sale only. Further par¬ 
ticulars as to No. 2 may be seen from the annexed conditions. The purchase and 
sale of horses is to be conducted on strictly commercial lines. It goes without say¬ 
ing that the association has a difficult task before it, but at the same time there can 
be no doubt that it will fulfill all reasonable expectations, provided that its members 
devote their whole interest to it and accord their hearty support. From this point 
of view members are expected to offer to the association not only such of their own 
horses for sale as are suitable for the association for improving the value of horses, 
but also to direct the attention without delay to horses anywhere that are intended 
for sale. Although the association set up the principle that they are to build up their 
business on as broad a basis as possible, it is their intention to commence operations 
chiefly with horses of full age—that is, with 5-year-olds. 

“ It should be one of the main objects of members to assist the association in finding 
such horses, and an urgent appeal is made to all its members to use their best endeav¬ 
ors in this direction. Just an ordinary notice on a post card serves this purpose, 
giving the exact address of the owner of the horse, with a short description, the age, 
sex, and pedigree if possible being stated. 

“ If, in addition to this, the owners of horses are induced to have their horses stabled 
and fed here, and when no opportunity is missed of directing the attention of pur¬ 
chasers to the efforts of the association for improving the value of horses, we hope 
that we shall succeed gradually in making the association a valuable factor in effect¬ 
ing the sale of Hanoverian horses. 

“The address of the association is the business premises of the association for the 
improvement of the value of horses, registered as a limited liability company, at 
Westercelle, Celle. 

“Freiherr v. Troschke, 

“JoHANNSEN, 

‘ ‘ The managing committee of the association 

for improving the value of horses, limited.'* 


COOPERATION AND COST OF LIVING. 


69 


CONDITIONS FOR THE RECEPTION AND SALE OF HORSES. 

(1) Horses are received (a) to be trained as riding or carriage horses; ( b) to be 
trained and sold as advantage. No horse can be received without having been 
accepted on previous application, for which purpose certain formulas supplied by 
the association are necessary. Should these contain any statement about any horse 
which is wittingly false, the committee of management is entitled, while reserving 
all other legal claims, to send back the horse immediately. Each application must 
be accompanied by the certificate of a veterinary surgeon that there has been no 
infectious disease on the premises whence the horse is brought. 

(2) The horses of which the association takes charge are kept at their stables on 
account of and at the risk of their owners. The association does not pay any com¬ 
pensation in the case of damage, illness, or death. Each horse which the association 
takes in is insured at the expense of the association against damage by fire. No 
other sort of insurance is effected by the association except at the express wish of 
the owner of any horse. 

(3) For each horse to be kept by the association (1) an entrance fee of 3 marks 
must be paid, and (2) each day for food, grooming, and training, 2 marks for members 
and 3 marks for others, in addition to any expense for shoeing and veterinary attend¬ 
ance. 

Further, a sum of 30 marks must be paid in advance when a horse is admitted; 
the horses of members enjoy,*of course, the preference in being admitted. 

(4) The association reserves to itself the right of having a horse taken back at once 
if any disease, where there is fear of infection, viciousness, or inaptitude for training 
or other defect may render this necessary, and the owner of any such horse is bound 
to have the horse removed immediately. The demand to the owner to take away 
his horse must be intimated by the association by a registered letter. Should any 
horse not have been taken back within 10 days after the demand has been sent off, 
the association is justified in selling the horse and retaining out of the proceeds the 
sum to which it lavs claim. 

(5) The association undertakes no responsibility or liability to compensation to 
the owners of horses in respect of any measures which the veterinary police may 
direct and carry out. The association reserves to itself the right of having any horses 
for whose admission application may be made examined at the owner’s stables or at 
some place near as to its usefulness and value. In the case of any horses which have 
not been previous’y examined, thev will be examined on their arrival before being 
admitted to the stables of the association. Animals which are rejected on examina¬ 
tion are to be taken back at once by their owners without the association being liable 
because of its rejection to any claim for compensation for any expenses which may 
be caused. The manager decides, as a rule, whether a horse may be admitted or not. 
In cases of doubt recourse may be had to the opinion of the managing committee or 
a member of it. 

(6) The owners expressly resign any right to any disposition of their horses as long 
as they are at the stables of the association, but are, however, entitled to take back 
their horses just when they like, without previous notice. 

(7) The association undertakes, when desired, to sell on commission any horses 
standing in their stables, charging members 5 per cent of the price paid and others 
10 per cent. The same commission is charged for each horse which is sold by its 
owner from the stables of the association without the assistance of the association. 

(8) When the association is instructed to sell a horse, the association and the owner 
agree as to the lowest price to be accepted. This lowest price agreed on must be 
regarded by the association as a trade secret. The association may not sell the horse 
at any lower price than agreed without the expressed sanction of the owner and is 
under an obligation to obtain the highest possible price for any horse he is instructed 
to sell and to safeguard all the interests of the owner as much as possible. The owner, 
however, is regarded legally as the seller and is responsible to the buyer for any claims 
to be substantiated by law. 

(9) The association is responsible after having sold a horse for the account of others 
to its owner for the purchase sum and must pay over the money, after deducting the 
sum due for commission and fodder, immediately after transferring the horse to the 
purchaser or after the lapse of the legally recognized period. 


70 


COOPERATION AND COST OE LIVING. 


Regulations of the Registered Cooperative Association, with Limited 

Liability, for the Profitable Purchase and Sale of Horses in Hanover. 

1. CONSTITUTION OF THE ASSOCIATION. 

(1) In pursuance of the law of May 1, 1889, as to associations, the undersigned are 
forming an association as a firm with the title: “An association for the profitable pur¬ 
chase and sale of horses, a registered association with limited liability, with its office 
and board in Hanover.” 

(2) The object of the undertaking is to purchase and sell Hanoverian horses. 

II. membership. 

(3) Any person or club capable of binding him or themselves by a contract can 
obtain membership. 

(4) Membership can not be obtained unless (a) the intending member signs a posi¬ 
tive declaration of his intention to join the association, and ( b ) a decision has been 
passed that he may be admitted a member. 

Should the managing committee refuse to admit anyone, an appeal may be made 
to the general meeting, whose decision is final. 

(5) Membership commences with the registration in the lists of members filed in 
the court, and, except in the case of death, ceases only when such registration is 
annulled. 

6. Individuals can withdraw from the association in accordance with the regula¬ 
tions of the association law. Notice must be given at least six months before the end 
of the business year. 

A member is not allowed to resign by merely transferring balance due to him from 
the association without the sanction of the board. 

7. Apart from the reasons specified in the association law, the managing committee, 
or a fifth of the members of the board, may propose the exclusion of any member in 
the case of his not observing or violating any of the statutory or other engagements 
entered into with the association (see art. 11 of this statute). 

Such exclusion then comes into operation at the end of the year by a resolution of 
the general meeting. 

8. Should the then assets, including the reserve fund and any balance available, not 
suffice to discharge the debts, the member thus excluded must pay a part of the 
deficiency in proportion to his share, the amount of which is calculated according to 
the regulations of article 36 of this statute. 

hi. the legal relations of the association with regard to the associates. 

9. The legal relation of the association and its associates is determined by law and 
the regulations of this statute. 

10. Each member of the association is entitled to being present at the general meet¬ 
ing, also to taking part in the deliberations, voting and elections, and to any advantages 
conferred by the association in accordance with the regulations affecting each case. 

11. Each member of the association is bound: (1) To observe the regulations of the 
statute and the general rules of business. (2) Not to act in a way prejudicial to the 
interests of the association. (3) Neither directly or indirectly to have any dealings 
with any similar undertaking without the sanction of the association at a general 
meeting. (4) To acquire a certain number of shares as defined by the regulations of 
article 27 of this statute and to pay the calls as may be prescribed. (5) To pay an 
entrance fee on becoming a member, the amount of which is fixed at a general meeting. 

(6) To be responsible to the amount of 250 marks for each share acquired in the busi¬ 
ness according to the regulations of the association law for any liabilities of the asso¬ 
ciation to itself or directly to its creditors. 

IV. REPRESENTATION AND THE CONDUCT OF THE BUSINESS. 

12. The association is represented in court and out of court by the managing com¬ 
mittee. The committee consists of 5 members. The committee is chosen at the 
general meeting. One of these 5 members retires in rotation annually, when a fresh 
member is chosen in his place; they remain, however, members and perform their 
duties on the committee till the appointment of their successors has been confirmed 
by being registered in the roll of the association. 

The board decides by lot which members retire first. The others retire according to 
their seniority and are eligible for reelection. 


CO 0 PEE ATI 0 N AND COST OF LIVING. 


71 


In the event of any member of the committee retiring or being prevented from 
attending when the election takes place, the board has to arrange for a substitute till 
the next general meeting takes place in which the by-election takes place. 

The members of the committee are honorary. In special cases, in view of their 
duties and exertions, they are entitled to a fair remuneration, the amount of which 
is to be fixed at the general meeting. 

13. Any declaratory act or signature on behalf of the association must be made by 
two members of the committee in order to have any legal significance for third parties. 
The signature is to be made in such a way that the signators write the firm or the asso¬ 
ciation in addition to signing their own names. 

14. Business devolving on the members of the committee is transacted in pursuance 
of resolutions which are passed at meetings held regularly in accordance with pre¬ 
scribed instructions with the chairman present or in meetings specially called by the 
chairman, who specifies the agenda. Half of the number of the members of the com¬ 
mittee constitute a quorum and a majority of votes is necessary for a resolution to be 
passed. 

All resolutions must be immediately entered in the minutes book of the committee, 
the pages of which are numbered; they must also be signed by all present. 

THE BOARD OF DIRECTORS. 

15. The board consists of 6 to 9 members, who are to be chosen at the general meet¬ 
ing. Of this number one is appointed president and another vice president. A third 
of the number retires each year and is replaced by fresh members. In the first two 
years it is settled by lot which members retire, afterwards by seniority; they are all 
eligible for reelection. 

In the event of more than a third of the directors retiring or being permanently 
prevented from attending when the election takes place, substitutes must be chosen 
within the next three months. 

16. The meetings of the directors are held at least four times a year in the presence 
of the chairman at regular intervals, according to the prescribed instructions; special 
meetings may be called by the chairman who must also state the agenda. 

A meeting of the board of directors must be called by the chairman whenever a 
third of the members of the board or the managing committee make a proposal to this 
effect, stating the subjects to be discussed. 

The board forms a quorum when at least the half of its members is present at any 
meeting; any resolution for which the majority votes is passed, and is to be entered 
in the minutes book of the board, the pages of which are numbered; the signature of 
those present is to be affixed to each resolution. 

17. Any duties in addition to those stated in the association law are laid down in 
the instructions prescribed for the board. 

GENERAL MEETING. 

18. The rights of the associates are exercised in the general meeting by resolutions 
passed by the associates present in accordance with the regulations of the association 
law. 

19. The general meeting is called by the managing committee. In the event of 
any delay in this respect and in certain other cases as determined by law or otherwise 
the board of directors is empowered to call the meeting. 

The general meeting is to be called in addition to the occasions fixed by the associa¬ 
tion law or in this statute expressly, whenever the interests of the association appear 
to require one. 

20. At least a week’s notice must be allowed in calling a general meeting and this 
notice must be made by a direct invitation and also by its publication in the associa¬ 
tion’s paper. 

21. The regular general meeting is to be held within the first five months after 
the end of the business year. The annual accounts and balance sheet as well as the 
distribution of profit and loss are the special subjects for the deliberation and resolu¬ 
tions of the general meeting. 

22. The duty of presiding at the general meeting devolves on the chairman of the 
managing committee, but may be delegated at any time to any other associate by a 
resolution of the meeting. The chairman appoints one of the members secretary to 
take down the minutes of the meeting and the requisite number to count the votes. 

23. In the case of elections the votes are recorded by means of slips of paper. Should 
the first voting not result in a decided majority, a second electing must be held amongst 
those who have received the greatest number of votes, the number of candidates being 


72 


COOPERATION AND COST OF LIVING. 


double that of those who are to be elected. Those are then elected who receive the 
greatest number of votes. In the event of two receiving the same number of votes, 
the meeting settles the matter by drawing lots. 

An election may also be made by general acclamation, should such a mode of elec¬ 
tion be proposed and the proposal not be opposed. In any other matters the asso¬ 
ciates vote by standing up or by remaining seated. 

24. All resolutions passed by the majority at a general meeting have a binding 
effect on the associates, providing that they were duly summoned to attend and the 
subjects for discussion were duly published. 

Resolutions affecting amendments or supplementary additions to the statute as 
to receiving a new associate or excluding a present member, as well as to depriving the 
managing committee or the board of directors or individual members of their office 
or rights requires before it takes effect a majority of three-quarters of those present. 
The resolution to dissolve and liquidate the association takes effect only when one 
of the same tenor has been passed in the general meeting called for this purpose and 
held within four weeks, each time with a majority of three-quarters of those present. 

The resolutions of the general meeting are to be entered at once in the minutes 
book of the general meeting, the pages of which are numbered and to be signed by the 
chairman, the secretary, and one other member present at the meeting. 

25. In addition to other matters mentioned in this statute the following are special 
subjects of resolutions to be passed at the general meeting: (1) Amendments or addi¬ 
tions to the statute; (2) approval and amendment of the order of business; (3) the 
dissolution or winding up of the association; (4) the election of the managing com¬ 
mittee, the board of directors, and such as are empowered to conduct lawsuits against 
members of the directorate or the managing committee; (5) the prosecution of legal 
claims against the members of the managing committee and the directorate; (6) 
the removal of members of the managing committee and the directorate from their 
offices; (7) approval of the instruction as to services to be rendered by the managing 
committee and the directorate; (8) the settling of disputes as to the meaning of the 
statute, the order of business or former resolutions of the general meeting; (9) deci¬ 
sions as to any complaints lodged against the managing committee or the directorate 
as to their conduct of the business; (10) the exclusion of members from their body; 
(11) approval of the balance sheet and distribution of the profit and loss account 
at the end of the year’s business; (12) exemption for responsibility on the part of the 
managing committee regarding their conduct of the business; (13) the fixing of the 
total amount which the loans of the association should not exceed; (14) the fixing of 
the amount of credit to be extended to associates which amount may not be exceeded. 

V. PUBLIC NOTICES. 

26. Any public notices sent out by the association are issued in the name of the 
firm and signed by two members of the managing committee; any sent out by the 
directorate in their own name must be signed by the chairman or vice chairman. 

Such notices are to be inserted in the “Hanoverian Paper for Agriculture and 
Forestry.” 

Should this paper cease to exist, the Imperial Advertiser shall be used till the 
next general meeting. 

VI. WORKING CAPITAL OF THE ASSOCIATION. 

Shares in the business. 

27. The amount up to which the individual associates can participate by their 
payments, their share in the business is limited to 100 marks. 

Each associate is bound to pay up this amount in full at once. 

An associate is allowed to hold several such shares. The number of such shares 
which a simple associate may hold is fixed at 100. 

The general meeting may resolve with simply a majority of \otes that the interest 
due to the associates on their shares and any profits be placed to the credit of the 
associates. 

Reserve fund. 

28. A reserve fund must be formed which will serve to cover any loss shown in the 
balance sh eet. This will be made by at least 30 per cent of the annual profits being ' 
transferred to it. The reserve fund shall equal at least the total face value of the 
shares in the business. 


COOPERATION' AND COST OF LIVING. 


73 


Working reserve fund. 

29. By transferring at least 20 per cant of the annual profits and by other appropria¬ 
tion to be determined by the general meeting, a special working reserve fund shall be 
raised for extraordinary expenditure subject to the decision of the general meeting 
and for covering the cost of extraordinary renewals and other extraordinary expenses. 

The working reserve fund shall be raised to at least a quarter of the total face value 
of the shares in the business. 

VII. MANAGEMENT OF THE BUSINESS. 

30. The general meeting has to decide as to the arrangements, extent, and limita¬ 
tion of the total scope of the business and of the working of special branches of it. 

The managing committee must draw up regulations as to the management of the 
whole business. These regulations after they have been duly considered by the 
directorate require the sanction of the general assembly. 

VIII. FINANCIAL ACCOUNTS. 

31. The business year commences on January 1 and ends on December 31. 

The first business year commences with the day on which the association is regis¬ 
tered in the court records and ends with December 31 of this year. 

The managing committee has, as soon as the business year comes to an end: (1) To 
draw up an accurate inventory with the cooperation of the directorate; (2) to see 
that the business books are all made up to the end of the year. 

32. The bookkeeping, the making up of the books, the list of the bills, and the 
striking of the balances must be all on commercial lines. 

Within four months after the end of each year the managing committee must lay 
before the directorate: (1) A balance showing the turnover, the receipts and pay¬ 
ments of the year: (2) a summary showing the profit and loss of the year. (3) a 
balance sheet showing the assets. Should the managing committee be dilatory or 
neglect to furnish these statements, the directorate is entitled to have the necessary 
work done by others at the expense of the managing committee. 

33. Separate accounts are to be shown in the balance sheet for: 

A. Assets: (1) Cash; (2) outstanding accounts arranged according to the nature of 
the articles and the value as they mature; (3) the value of the premises and the 
buildings after writing off 2 per cent of the value; (4) the value of the office and 
other furniture after writing off at least 10 per cent per year; (5) any stock of goods. 

B. Debts: (1) The balance in the business due to members; (2) the reserve funds; 
(3) the working reserve; (4) the debts arranged according to the nature of the articles 
purchased, and (5) the current expenses which have to be met. 

34. The annual accounts and balance sheet, after having been examined by the 
directorate, are exposed to view in the offices of the association for the purpose of inspec¬ 
tion; or should the directorate so determine a printed copy is forwarded to each asso¬ 
ciate and, together with the proposals of the directorate as to the distribution of the 
profits, is laid before the general meeting for these and the accounts to be passed and 
with the view to the release of the managing committee from any further liability. 

The general meeting has the right of appointing a committee to check the accounts. 
The directorate has especially to examine and see whether the values as stated in the 
balance sheet are actual and the items of the balance correspond with those of the 
ledger, whether the outstanding accounts seem secured and the depreciation in the 
various cases is adequate. 

35. The general-reserve fund and the working reserve are to be increased by the 
appropriations as determined in articles 28 and 29 out of the net profits, after which 
4 per cent is to be placed to the credit of the associates. 

The general meeting decides as to the way in which the rest is to be distributed. 

Any surplus that may remain for the associates is either written to the credit of the 
individual associates or after the expiration of six months paid over to them in cash. 

36. Should, when the working reserve is exhausted, a deficit present itself, the 
general-reserve fund may be used to cover this. If the generahreserve fund is also 
exhausted, the business credit of the associates may be utilized in due proportion to 
their holdings for covering this loss, while any further deficiencies must be made good 
by the associates in proportion to their liability, but not beyond this. 


74 


COOPERATION AND COST OF LIVING. 


IX. DISSOLUTION AND LIQUIDATION. 

37. Dissolution and liquidation are effected in accordance with the regulations of the 
association law. 

The resolutions as to the distribution of the profit and loss contained in this statute 
are to be carried out. as there indicated, in the event of the dissolution and liquida¬ 
tion of the cooperative association. 

X. ASSOCIATION UNION. 

38. The association enters the ‘‘Union of the Hanoverian Agricultural Associations.’’ 
The director of the union or his duly authorized representative and the auditor of the 
union are entitled to attend the general meeting and to take part in the deliberations. 

Hanover, 15th May, 1905. 

Robert J. Thompson, Consul. 

Hanover, Germany, May 9, 1912. 


MAGDEBURG. 

Cooperative Societies in Magdeburg. 

In Magdeburg there are three cooperative societies engaged in the distribution of the 
co mm on necessaries of life, viz, the “Konsumverein fuer Magdeburg und Umgegend, 
E. G. m. b. H.,” the “Eisenbahn Konsumverein zu Magdeburg, E. G. m. b. H.,” 
and the ‘’Konsumverein (Anstalt) von Friedrich Krupp A. G. Grusonwerke zu 
Magdeburg-Buckau. ’ ’ 

This report will cover information concerning the first-mentioned society only, inas¬ 
much as the “Eisenbahn Konsumverein” is run under the same system, with the 
exception that its membership is open only to railway officials and employees. A 
separate report on the Friedrich Krupp Society has been compiled by the vice consul 
and is forwarded herewith. 

The “Konsumverein fuer Magdeburg und Umgegend” was organized in 1863 and 
is one of the oldest institutions of its kind in the Empire. It is now the only coopera¬ 
tive society in the Regierungsbezirk Magdeburg open to membership from all classes 
of persons, regardless of profession or standing. The Konsumverein of Schoenebeck, 
a town near this city, with its eight retail stores was recently placed under the man¬ 
agement of the Magdeburg society and has ceased to exist as an individual 
establishment. 

The society erected in 1902 a handsome building, for its use as a productive and 
distribution center, at a total cost of about $125,000. In it are the main offices, library 
for members, savings bank, bakery, soda-water plant, establishment for the roasting 
of coffee, coal and fuel cellar, and large warehouses for the storing of groceries and 
colonial produce. A stable with 22 stalls and blacksmith shop is connected with the 
main building. 

A private track connects the grounds with the railway station in Magdeburg-Neu- 
stadt. In 1910, 651 loaded cars ran in on this track. 

The bakery is fitted up with 14 ovens and with mixing, weighing, and forming 
machines of the most modern types. In 1910 the production in this department was 
as follows: 


Black bread. 

At $0.18 

At $0.17. 

At $0.12. 

At $0.06. 

Loaves. 

221,085 

200,461 

1,065,927 

4,874 



White bread (breakfast rolls, etc.) and cake were baked to the amount of 478,834 marks ($113,903). 


The society receives its coal supply from one of the largest Bohemian coal-exporting 
firms, and was able to offer its members exceptionably good prices in 1910, because of 
the favorable concessions of the Bohemian firm and the low freight rates prevailing 
on the Elbe River. 












COOPERATION AND COST OF LIVING. 


75 


During the year the following supplies of fuel were received by the society: 


Bohemian lignite_ 

Briquets. 

Coke dust. 

Charcoal, pine. 

Charcoal, beech.. 

Firewood, in logs. 

Firewood, in bunches 


hundredweight 

.do.. 

.do.. 

.do.. 

.sacks 

.logs 

.bunches 


115, 453 
32, 500 
36, 700 
244 
5, 000 
21, 600 
7, 243 


In the coffee-roasting department 125,782 pounds of raw coffee were roasted in 1910, 
somewhat less than in the preceding year. The reason for the decrease may be 
ascribed to the increasing demand for cocoa and coffee substitutes, because of the 
unusual high prices of coffee. 

In the soda-water plant 61,220 bottles of nonalcoholic beverages were produced in 
1910, as against 54,418 bottles in 1909. Statistics for 1911 are not yet procurable, but 
it is stated that owning to the intense heat of the past summer the production in this 
department was almost double that of any preceding year. 

The society’s library was used to a large extent by the members. During the year 
19,034 volumes were lent out, and the daily average number of readers in the library 
when opened (Wednesdays and Saturdays) was 35. 

In the savings bank there were on January 1, 1910, in deposits on hand, 109,854 
marks ($26,145); December 31, 1910, in deposits on hand, 165,092 marks ($39,290); 
or an increase during the year of 55,238 marks ($13,145). Four per cent interest is paid 
on the deposits. 

The society had 31 distribution retail stores in various parts of the city and neighbor¬ 
ing villages in 1910, and now has the additional 8 stores taken over from the Schoene- 
beck Society. There were 12,299 listed members. 

The average purchase of each member from the society amounted to 322 marks ($77), 

An idea of the volume of the annual business transacted may be had from the follow¬ 
ing figures showing the total amount of the wares sold: 

Marks. Dollars. 

Groceries and colonial wares. 2, 289, 785=(544, 969) 

Black bread. 849, 282= (202.129) 

White bread, cake, etc. 479, 692=(114,167) 

Fuel. 121, 676=( 28, 959) 


•Total. 3, 740, 435=(890, 224) 

In addition to this, goods of various kinds, valuing 216,245 marks ($51,466), were 
sold in retail stores, which by special arrangement with the society agree to sell to its 
members upon presentation of their membership tickets at a cash rebate of 5 per cent, 

The society purchased during the year from: (a) The wholesale association of German 
cooperative societies wares valuing 1,223,451 marks ($281,181), or 43.4 per cent of the 
total. (6) Private concerns, wares valuing 1,598,657 marks ($380,480), or 56.6 per cent 
of the total. 

A dividend of 2,339 marks ($557) was received from the wholesale association. The 
society is now interested in this institution to the extent of 28,000 marks ($6,664). 

In the regular salaried employment of the society in 1910 were 3 directing managers, 
5 bookkeepers, 2 office clerks, 1 warehouse manager, 29 store managers, 86 saleswomen, 
68 bakers, 2 smiths, 1 plumber, 1 mason. 1 carpenter, 1 porter, 3 machinists, 42 drivers 
and workmen, 9 women for sundry work, and 60 women bread carriers. Total, 314 
persons. 

About 7 per cent in cash was refunded in dividends to the buying members in 1910, 
Rebate trading stamps are given with each sale; 6 per cent rebate is guaranteed, and 
whatever additional profits remain after the payment of all expenses are returned to 
the members, according to the amounts purchased by them during the year as shown 
by their trading stamps. The clear profit in 1910 amounted to 35,592 marks ($8,471), 
or about 1 per cent of the total goods sold. The local market prices rule in general in 
the society’s stores, though in some special instances certain goods are sold somewhat 
under the regular retail prices in the city. In former years when the expenses were 
lower, much higher dividends were paid. 

The society in Schoenebeck, with 8 stores, sold its members in 1910 wares to the 
extent of 544,747 marks ($129,650). A dividend of about 8 per cent was received by 
them. 

















COOPERATION AND COST OF LIVING. 


76 

v 

SPECIAL REGULATIONS OF THE SOCIETY. 

The purpose of the undertaking is the purchase or production of the common nec¬ 
essaries of life in wholesale quantities and the sale in retail to members, with the refund 
of the resulting difference after the payment of the legitimate expenses. 

Only such persons may buy in the society’s stores who may be able to present 
tickets of membership. • 

The working capital consists of funds obtained from entrance fees, payments of 
membership business shares, and additions to the reserve fund from the profits. 

Membership is secured after a written application therefor has been made, favorable 
action thereupon taken by the management, and the name and address of the applying 
person been registered in the list of members. The resignation of a member may 
occur at any time, but can only take effect at the end of the calendar year within 
which it takes place. 

Three months’ written notice of the intention to resign must have been previously 
filed with the management. Upon the death of a member during a year his heirs 
succeed to his rights of membership until the end of, that year. 

RIGHTS AND OBLIGATIONS OF MEMBERS. 

Rights. 

1. Each member is allowed one vote in the meetings of the general assembly of 
members and may make any motion in regard to the society’s business that he may 
desire. 

2. ' To buy all wares for cash offered for sale in the society’s retail stores for his or 
his family’s personal use. 

3. To claim a dividend according to sections 25 and 28 of the statutes. These 
paragraphs provide as follows: Of the clear profits at least 1 per cent is to be added to 
the reserve fund and at least one-fiftieth part to the disposition fund. At least one 
twenty-fifth part may be devoted to any other purposes if special provision to that 
effect is made by the general assembly. The remaining part of the clear profit is to 
be returned in dividends to the members in such proportion as their trading stamps 
may show them to have purchased from the society. 

4. The use of the library, limited only to special restrictions regarding the same in 
the statutes. 

Obligations. 

1. The payment of 1 mark ($0,238) upon entrance. 

2. The payment of the membership business share, amounting to 30 marks ($7.14). 
This sum may be paid at once or in annual payments of 5 marks ($1.19). When the 
membership has ceased to exist, the paid-in business share is refunded. 

3. To act always in accordance with the society’s statutes or special resolutions of 
the general assembly. 

4. At all times to assist the society as far as possible in its endeavor to attain further 
development. 

5. After retirement from the society to return the membership ticket, or if this 
can not be done to pay 1 mark ($0,238) in lieu thereof. 

6. The guaranty for the payment of the society’s debts up to the amount called for 
in section 13 of the statutes, in case all other available funds should fail to cover the 
said debts. This sum amounts to 30 marks ($7.14) for each member. 

As stated above, 1 per cent of the clear profits is annually added to the reserve fund. 
This fund is intended to cover any loss that might occur, and is limited to 150,000 
marks ($35,700) so far as the additions from the annual profits are concerned. If such 
amount is reached, it may thereafter be increased only by the 1 mark entrance fees. 
The reserve fund at the end of 1910 amounted to 79,000 marks ($18,802). 

The rebate trading stamps accompanying each purchase in the society’s stores 
may be cashed in at such time after the end of the calendar year as the management 
may set-therefor. If cashed in during the year, a rebate of 5 per cent only is granted. 

The organs of the society for the transaction of its business are: (1) The management; 
(2) board of supervising directors; (3) general assembly of members. 

1. The management consists of the first business manager, second business manager, 
and supervising manager. They are salaried employees and are appointed by the 
board of supervising directors subject to the approval of the general assembly. Their 
tenure of office depends upon their capability and good behavior. Their power is 
restricted to the attendance of the society’s business in its ordinary course. Their 
action in matters of special import, such as building improvements or additions, 


COOPERATION AND COST OF LIVING. 77 


appointments of employees, etc., is subject to the approval of the board of supervising 
directors. 

2. This body consists of 21 members, 7 of whom retire annually. They are elected 
in the general assembly in its September meeting for a period of three years. They 
must be members of the society. Their main duties consist of the general supervision 
of the work of the management, the auditing of the books, the formulation of provi¬ 
sions regarding the division of profits, etc. 

3. The general assembly is a meeting of the members, in which each member has 
one vote and in which all matters concerning the society are subject to discussion 
and action upon. The regular semiannual meetings take place in March and Sep¬ 
tember of each year. Special meetings may be called at any time during the year. 

The dissolution of the society may occur: (1) If a resolution to that effect is taken 
by the general assembly in accordance with the regulations in regard thereto as laid 
down in the law concerning cooperative societies; (2) in case of bankruptcy; (3) if 
the proper legal authorities find it necessary to undertake the dissolution in accordance 
with the legal requirements. 

Any funds remaining after the dissolution shall be given to some other cooperative 
society in need thereof. 

There is also in Magdeburg a private company, “Die Magdeburg Warenverein, ” 
dealing exclusively in the common necessaries of life. This concern has 60 retail 
stores in the city and suburbs, and is doing an enormous business. It advertises the 
sale of practically all of its wares at prices somewhat below the market price margin, 
and in addition gives cash rebate trading stamps of 10 per cent on nearly all purchases. 
Naturally the competition between this concern and the cooperative society is sharp, 
and all efforts are used by both to prove the advantages of their systems. The former 
claims that inasmuch as the management of the cooperative society is in the hands of 
salaried men, who receive no additional commissions, their personal interests are not 
at stake, and therefore less attention is paid by them toward the procuring of wares 
worth the money expended; that but little effort is made by them toward the cur¬ 
tailing of expenses, and also that the large private wholesale and productive concerns 
prefer business relations with private concerns, and consequently make better con¬ 
cessions to them than the cooperative societies. In short, that the cooperative con¬ 
sumer pays more for his wares than they are actually worth, and that the promised 
dividend is intended only to entice him, but really saves him but little in the end. 
The society claims that the profits of the private concern go into the pockets of the 
owners, whereas the division of its profits among its members directly necessarily 
cheapens the actual cost of their products. 

It is difficult to decide just which of the above claims plays the weightier r61e in the 
proper consideration of results as to the actual cheapening of the common necessaries 
of life in the district. At all events it must be admitted that the cooperative move¬ 
ment has done much toward preventing the establishment of illegitimately high 
prices by private concerns. 

Alfred W. Donegan, Consul. 


American Consulate, 

Magdeburg , Germany, February 2, 1912. 


STETTIN. 

Cooperation and the Cost of Living in the Consular District of Stettin, 

Germany. 

[Report as per special circular instruction, consular No. 66, dated Washington, Oct. 12,1911.] 

There is no variation at Stettin and in the surrounding territory from the general 
increase of the cost of living prevailing for the past decade in Germany. Conclusions 
based upon exhaustive investigations conducted by such economic German authori¬ 
ties as Dr. Calwer and Prof. Birmer demonstrate the international character of the 
rise of prices. Calwer asserts that during the period 189&-1908 prices in Germany 
went up 27 per cent. Birmer takes the small-trade prices of the largest city in the 
world, London, for the period 1895-1910 for food supplies and calculates a rise of 
27-28 per cent in 15 years. He does not think that the gold production, which he 
admits was trebled during the period of 1891-1910, is the principal cause of the increased 
cost of living. As regards Germany he claims that the steady increase in the cost of 
labor has much to do with the higher cost of living. He gives as an important cause 
an increase for 1888-1910 in the wages of the miners in Germany amounting to 42-87 
per cent, and for labor in the chemical industries of Germany an increase of 50 per 



78 


COOPERATION AND COST OF LIVING. 


cent. He says that for 1904-1911 the wages of Prussian railroad laborers increased 
28$ per cent. 

Regarding local food prices the highest figures this winter were as follows (calculated 
in German weights, nine-tenths of a German pound being equal to 1 English pound 
avoirdupois): Beef—roast beef 19-21 cents per German pound, ribs 18-19 cents, 
fillet 29-30, tongue 31-38, chopped 18-19, soup meat 15-19, liver 26-29, breast 
15-19. Veal sold—steak 33-36 cents per pound, tongue 31-33, chops 26-29, leg 23-25, 
breast 19-20, liver 29-33, cooking meat 18-19. Pork sold—chops 19-21, salted ribs 24, 
knuckles and pigs feet 14, liver 29, ham 18-19, smoked (generally) 15-17. Mutton 
brought—ribs 19-20, breast 14-17, leg 23-25, liver 29-30. The most expensive fish 
sold for 27-29 cents per pound (perch); and the cheapest (pike), 14-15. Butter (best 
dairy) 40-43 cents per pound, table butter 33-36, Pommeranian country butter 31. 
Eggs—select 48 cents per “Mandel” measure (16 eggs), medium quality 43 cents, 
box eggs 31 cents. Lard 12-14 cents per pound. 

Necessaries of life in dry goods, clothing, etc., all followed the general rise in Ger¬ 
many. The same applies to rents, which in all German cities are steadily going up 
with the influx of urban population drawn to the large cities’ by the formidable devel¬ 
opment of German industries since the restoration of the German Empire in 1871. 

The wonderful development of cooperative associations in Germany has extended 
to this section as well. In the Province of Pommerania the following associations' 
have been formed: (1) Verband pommerscher landwirtschaftlicher Genossenschaften. 
(2) Molkereiverband der Provinz Pommern. Verband laendlicher Genossenschaften 
Raiffeinsescher Organisation. (3) Vorschuss- und Kreditvereine. (4) Zentralge- 
nossenschaften: (a) iWimersche landwirtschaftliche Hauptgenossenschaft. (6) Pom- 
mersche Landesgenossenschaftskasse. (c) Pommersche Spiritusverwertungsgenossen- 
schaft. (d) Verkaufsverband Norddeutscher Nolkereien. In addition thereto a 
large number of cooperative societies representing various interests like cattle breed¬ 
ing, electric-light circuits, potato culture, agricultural machinery, other machinery, 
poultry and egg culture, etc., have been created, and all have proved to be a material 
advantage to the prosperity of those connected therewith. In a measure the remark¬ 
able progress which agrarian interests in Germany, especially in this great agricul¬ 
tural section of Prussia, have enjoyed in the last decade may be ascribed to these 
practical organizations, although considerable opposition is developing in other 
quarters against the economic utilization of cooperative organizations like some of 
these Genossenschaften because of the control of prices fostered by the beneficiaries. 
But as yet they are considered an important factor in the prosperity which Germany 
is enjoying in agrarian as well as industrial quarters. What the agricultural coopera¬ 
tive societies mean to the agrarian is demonstrated by the following facts given by one 
of the founders of these associations in Prussia, Von Knebel-Doeberitz, of Neu-Stettin. 
Starting the movement in 1889 by persuading a number of agrarians to buy 100,000 
“Zentner” of superphosphate at considerably lower prices than paid to the “ring” 
until then, he discovered that whereas formerly 54 cents was paid for cattle salts the 
Genossenschaft could furnish the salt for 31 cents and still enjoy a fair profit. Kainit 
(salt) was sold at 48 cents by the dealers, whereas the association sold it at 32 cents 
and still made 3 per cent profit thereby. Superphosphate, and “uncontrolled in 
quality” at that, cost $2.26, and now it could be delivered by the association with a 
“guarantee” for $1.33, in small lots, too. What the “control” of the material accom¬ 
plished can be seen from Mr. Von Knebel-Doeberitz’s statement that Thomas meal 
until then only averaged 7 per cent of phosphoric acid, and now it showed as high as 
18 per cent. Palm cakes went down in price soon after amounting to 95 cents to $1.19. 
The result has been the creation of 22 Pommeranians. 

Purchasing and selling societies: The business conducted by these organizations 
Up to 1909 amounted to $11,923,800, but is not as yet of sufficient proportions to exer¬ 
cise a controlling influence upon the general international market for fertilizers and 
feedstuffs, according to the statement of the manager for the Genossenschaften ap¬ 
pointed by the Pommeranian provincial legislative body, in his publication entitled 
“Das landwirtschaftliche Genossenschaftsweses in der Provinz Pommern,” by Karl 
Sparr, a copy of which book I add to this report herewith. A detailed description of 
the organization of the agrarian cooperative societies is given in this publication, 
showing that this one organization alone records a business for the fiscal year 1908-9 
amounting to $8,853,600. He also states that there are 41 cooperative associations 
of this kind in Germany with 1,500,000 members. The quantity of Thomas meal 
bought in one year alone by these 41 societies Sparr estimates at 683,435 tons. 

The activity of the “Verband pommerscher landwirtschaftlicher Genossenschaf¬ 
ten” extends over the following sphere: (1) Control of the societies belonging to the 
general association; (2) revision of the books of the societies and checking of the annual 
estimates; (3) general advice in regard to management of the societies; (4) exami- 


COOPERATION AND COST OF LIVING. 


79 


nation of their bills and balances; (5) expert advice given when necessary regarding 
certain agricultural and industrial branches; (6) organization of new branches; (7) 
providing societies with capable employees; (8) judicial representation in litigation 
without cost to the branch or subsociety; (9) facilitating insurance against burglary, 
accident, hailstorm damages, etc.; (10) general advice in all insurance matters not 
included in the foregoing section; (11) distribution of instructive literature of various 
kinds, including the official organ, annual report, etc.; (12) propagation of coopera¬ 
tive policies by addresses, annual meetings, and regular lecture courses by trained 
experts. 

In 1911 Pommerania had organized, in addition to the 22 purchasing and selling 
societies, 574 cooperative associations altogether, of which 377 alone represented 
savings and loan institutions, 76 the electrical branch (which within one year had 
grown from 19 to 76), 15 for horse breeding, 22 distilleries, 6 thrashing machine socie¬ 
ties, etc. 

How the business of these cooperative organizations has grown is shown by a com¬ 
parison of figures for 1900 and 1910. The statistics -were: 



1900 

1910 

Purchasing and selling societies. 

82,810,714 

2,390,317 

$11,084,267 
36,447,897 
83,242 
1,795,865 
1,040,095 
263,779 
38,180 

Savings and loan institutions. 

Mechanics’ societies. 

Distilleries and starch factories. 

519,545 

Cattle-breeding associations. 

Machine shops. 


Miscellaneous societies. 





Interesting data are furnished by the above-named Mr. Sparr in his book on the 
Genossenschaften, regarding the Purchasing and Selling Association at Auklam. This 
society was founded in 1895. It had 650 members in 1911 with a combined liability 
of 2,405,600 marks. Its business is shown by the following figures: (1) Goods depart¬ 
ment, 2,915,898.28 marks. (2) Grain department, 4,951,159.94 marks. (3) Potato 
department, 476,466.57 marks. (4) Machinery department, 197,129.74 marks. (5) Cat¬ 
tle department, 1,223,077.86; total, 9,763,732.39 marks. A net profit accrued for the 
year amounting to 57,089.48 marks. The assets of the association were reserve 355,615 
and outstanding assets 123,140 marks, totaling 478,835 marks. 

It is to be remembered that these figures only represent the business of 1 of the 22 
purchasing and selling cooperative associations of the Pomeranian Agricultural 
General Society. The annual report of this organization for 1910, published in Stettin 
in 1911, is herewith added to this report, as also the yearbook and statistical statement 
for the various subdistricts of Pomerania. They furnish interesting detail informa¬ 
tion in addition to the exhaustive treatise mentioned above and published by Mr. 
Sparr, the general manager of the association’s governmental advisory board. 

William C. Teichmann, 

American Consul. 

Stettin, Germany, March 28, 1912. 


PLAUEN. 

Cooperation and the Cost of Living. 

The cooperative movement among consumers is a conception of the working classes, 
and is fostered and developed by the organized workingman under the auspices of the 
Social Democratic Political Party. The movement partakes of both a political as well 
as economical character, and, as a means of increasing the power and prestige of this 
incipient trust, it was resolved at the last congress on union labor that it was the duty 
of all organized workingmen to exclusively confine their purchases to the working 
peoples cooperative consumers’ stores in the towns wherein they lived. The possible 
grade of efficiency and magnitude to be achieved by such association may be best 
explained by saying that this movement to secure the most advantageous employ¬ 
ment of the workingman’s purchasing power is developed under the protection of the 
Socialist Party and backed by the interests of organized labor throughout the Empire. 
Its present importance as a commercial factor is extremely large, and its competition 
has made itself decidedly felt among independent retail dealers. Indeed, there exists 
here the fundament for the most powerful type of trust that an era of trust develop- 















80 


COOPERATION AND COST OF LIVING. 


ment has brought forth. The movement in its present tendency may be said to be 
somewhat over 70 years old, though its present weight and rapid development is a 
matter of recent years. 

There are two distinct types of consumers’ cooperative societies—the type charac¬ 
terized by no particular political bearing, working upon the principle that the imme¬ 
diate advantage to be derived by a cooperative employment of the purchasing power 
of its members, and that type with a socialistic tendency, equipped with strong organi¬ 
zation and definite purposes for the future, the fully conscious idea of organized labor. 
Almost exclusive importance may, for this district, be attached to the latter type of 
organization, represented by the Konsum- and Sparverein, situated in Plauen. 

The local Cooperative Consumers’ and Savings Association comprises 7,417 members, 
wherein the majority of the units represent families. It has 18 stores in various parts 
of the city, and is in position to supply its members with almost all the necejsities 
of life, from victuals and clothing to household implements, hardware, and sewing 
machines. This association has been in existence for 21 years and has enjoyed a 
steady growth in prosperity and popularity. For the association’s fiscal year 1909-10 
goods were sold to the amount of 1,554,648 marks ($370,006); for the fiscal year 1910-11, 
1,787,063 marks ($425,321), being an increase of 232,416 marks ($55,315), or about 
15 per cent better than last year. 

Members of this association chiefly patronize its victual and grocery departments. 
However, the possibility of purchasing as good articles at more reasonable prices in 
the society’s large assortment of other household and clothing wares is making itself 
more apparent. An example will serve to illustrate. The association sells rotation 
washing machines for 45 marks ($10.71), which same machine is sold by an independ¬ 
ent dealer here for 50 marks ($11.90). Further, a 15 per cent dividend for 1911 
comes into consideration, making the actual cost of this machine 38.25 marks ($9.14), 
or a saving of 11.75 marks ($2.76). Orders are taken at all association stores for coal 
in quarter and half carloads. Toys, garden implements, games, and various articles 
of bric-a-brac have been taken up, and the officers of the society express their 
willingness to consider all suggestions on the part of the members. 

As mentioned, this association is an institution exclusively for and organized by 
the working class, and the purchasing power per unit of membership is naturally small. 
The average expenditure per member for wares of the association was 240.97 marks 
($57.35) in 1910-11 and in 1909-10 218.96 marks ($52.09), a gain of 22.01 marks ($5.24). 
However, as some 1,862 members made no use of their membership privileges, the 
showing for the actual average expenditure is somewhat better, being 321.70 marks 
($76.56) per year. 

The association achieved upon the year’s turnover of 1,787,063 marks ($425,321) a 
net profit of 262,913 marks ($62,573), this including a profit of $1,085 carried over from 
1909-10. This profit was disposed of as follows: 

15 per cent dividend to members possessing 1,481,634 purchase stamps for 


victuals and dry goods. $52, 894. 31 

$0.00476 rebate on 355,215 15-cent loaves of bread. 2, 536. 22 

$0.00952 rebate on 89,791 20-cent loaves of bread. 854. 81 

5 per cent interest on membership capital. 763. 98 

For building fund.. 1, 666. 00 

For insurance fund. 1,428. 00 

For education fund.. 47. 60 

Carried over on next year’s account. 2, 382. 26 


Total... 62,573.18 


The local association is directly affiliated with the “ Grosseinkaufsgesellschaft 
Deutscher Konsumvereine (the Wholesale Buying Society of the German Consumers’ 
Associations), and purchases the greater part of its supplies from this source. The 
above-named central association has also its own soap and cigar factories, and will 
in the coming year have opened a match factory. These wares are, of course, given 
preference by the local, as well as by all similar consumers’ associations, over like 
wares produced by independent enterprise. Further, the local society has its own 
bakeries and bottling plant. It produces soda water and flavored nonalcoholic 
drinks, opens savings accounts for its members, and contemplates, upon the elabora¬ 
tion and establishment of the plans of the Central Association of Consumers’ Associa¬ 
tions (Zentralverband Deutscher Konsumvereine), of starting an insurance branch, 
covering life, accident, old-age, invalid, sick, live-stock, and fire insurance. 

A central warehouse and steam bakery were completed by the association last year 
and are equipped in the most approved modern manner. Equipments for beer bottling, 
coffee roasting, and the production of soda water and lemonades have been provided 
in the same building. Here also are located the business headquarters of the society. 












COOPERATION AND COST OF LIVING. 


81 


The association has a board of control (Aufsichtsrat) composed of 21 members, who 
keep in close contact with the society’s business and exercise a strict regulation. Run¬ 
ning expenses approximate $46,000 a year. The bulk of this expenditure is composed 
of wages and rent. Tfie members of the board serve in an honorary capacity, with 
the exception of the three directors, who are salaried officers. 

High cost of living can not but greatly strengthen this endeavor of the working 
people to protect themselves against the high profits of the middlemen, and will finally 
result in the taking up of various manufacturing branches on the cooperative plan with 
all seriousness. The movement does away with the profits of the middlemen entirely 
and, in view of the large quantities purchased by the Central Purchasing Association, 
often secures further saving. The cooperative employment of the working classes’ 
purchasing power has a future of great possibilities and one which seems fraught 
with all those peculiar dangers of a financial oligarchy. 

R. B. Mosher, American Consul. 

Plauen, Saxony, March 2 , 1912. 


MANNHEIM. 

Mannheimer Gewerbebank. 

The “Mannheimer Gewerbebank” (Mannheimer Trades Bank) was organized unde 
the imperial law of May 11, 1897, which was enacted for the purpose of encouraging 
the formation of cooperative companies. The object in establishing this bank was to 
assist small tradesmen in starting in business or extending a business already started 
by providing a fund from which they could borrow. 

In order, however, to secure a loan from this bank it is necessary to become a member 
of the association. The conditions of membership are that one must subscribe for at 
least one share of stock of 500 marks ($119). This is payable in cash or $23.80 down 
and $5.95 every three months. No one can subscribe for more than 10 shares. The 
liability of each member is limited to twice the amount of his shares, so that the 
greatest liability of any one member can not exceed 10,000 marks ($2,380). 

The management of the bank is conducted by two executives under direction of a 
supervising board, which is chosen at a yearly meeting of all the members. 

The two managing directors are chosen for an indefinite time and are responsible 
for the conduct of the general business. They are paid salaries which amount to 
about $1,500 each per annum. They may be dismissed by the board of directors at 
any time. 

The board of directors consists of from 9 to 12 members, who are chosen at the general 
meeting of the members in March. One-third of the members of the board is chosen 
each year. 

The board has direct supervision of the business, and in conjunction with the two 
managers determines what loans are to be made, terms of credit, dividends to be 
declared, contracts to be made, or any matter of importance connected with the 
conduct of the business. 

A general meeting of all members must be held at least once a year, but a meeting 
may be called by the board of directors at any time, and the board must call a meeting 
on petition of one-tenth of the members of the association. 

Subjects to be considered must be announced at least three days before the meeting. 
The general assembly has full power to accept or reject new members, to exclude old 
members in the interest of the association, to revise the reports of its officers, and to 
regulate in any way whatsoever the conduct of the business. While the members have 
this power, in practice the business is really under the control of the board of directors. 

In case a member is dropped, his stock is returned to him; and in case a dividend for 
the year is declared, this is also paid up to the time of his connection with the 
association. 

The bank does a general banking business, receiving deposits, attending to exchange, 
making loans, and buying and selling stocks and bonds. 

It has connection with other banking institutes as well as other such associations. 
It acts as agent for its members in buying stocks, but for itself can only purchase State 
bonds for its reserve fund. Speculation of any kind is not permitted. A savings 
bank department is also conducted. If the time of notice of withdrawal is one year, 
the rate of interest paid on deposits is 4 per cent; if six months, 3| per cent; if less 
than six months, 3£ per cent. 

Loans can only be made to members. Security must be given, except where the 
business of the member is such it would be a guaranty against loss. Members of the 

H. Doc. 833, 62-2-6 



82 


COOPERATION AND COST OF LIVING. 


board of directors may not go security for loans, except when a commission of three 
other members have passed upon the security. 

The limit of a loan to any one member has been $14,280, but this is to be raised to 
$23,800. The rate of interest is the same as other bank rates. Loans may be made 
for any length of time. 

The bank started business on January 1, 1901, with 68 members, which during the 
first year increased to 181. The amount of paid-up capital was $19,223. 

The number of members January 1, 1912, was 563 and the paid-up capital was 
$109,710. The amount of capital subscribed but not yet paid in is $4,412. There 
were 959 shares issued at $119 each, so the liability of the members in addition to the 
paid-in capital was $114,121. 

The inclosed table shows the development of the bank from its organization till the 
end of December, 1911. The first year of its existence was a bad year industrially, and 
no dividend was declared. Since then the reserve fund has been gradually increased, 
and the dividends have been raised from 4 to 6 per cent. It is probable that the 
dividend will not be raised beyond this, but any additional profit will be paid into the 
reserve fund. 

Two copies of the by-laws are forwarded herewith. 

Samuel H. Shank, American Consul. 

Mannheim, Germany, March 11, 1912. 


NUREMBERG. 

Cooperative Associations at Nuremberg. 

The only cooperative association in the Nuremberg consular district, selling directly 
to the ultimate consumer and the operations of which directly affect the cost of living 
to the people are what are known as the “ Konsumvereine.” These exist all through¬ 
out Germany, operated upon generally identical plans, but each local association being 
a distinct organization, affiliated in a general union and a shareholder in a wholesale 
purchasing association. The aim of each local Konsumverein is to secure as many 
members as possible and to supply them so far as practicable with all the necessities 
of life as good and cheap as possible and, over and above this, to earn a regular dividend 
for the members. With this object in view, they operate retail stores where all kinds 
of goods in daily use are retailed for cash, but to members only. 

The German organizations of this character had their beginning in what was known 
as the Schulze-Delitsch Association,, the membership of which was originally drawn 
largely from the middle classes, and which aimed to work in harmony with the general 
retailers, and was more a credit association than a pure cooperative organization. 
About 1890, the German workingmen began to take an interest in cooperation and to 
join the associations in great number, so that many local associations passed almost 
entirely under their control, and they began to assume a more and more pure coopera¬ 
tive character, and in 1902 some 90 local organizations withdrew from membership in 
the “Allgemeine Genossenschaftsverband” (General Credit Association) and founded 
the “Centralverband deutscher Konsumvereine” (Central Union of German Coopera¬ 
tive Societies). Associated with this new organization was the “ Grosseinkaufs- 
gesellschaf t ” (Wholesale Purchasing Association) of Hamburg. This wholesale pur¬ 
chasing association is a manufacturing as well as purchasing association. It owns and 
operates flour mills, sugar factories, match factories, soap factories, cigar and tobacco 
factories, etc. Its stock is owned by the various local Konsumvereine, each local 
being entitled to 1 share of stock for each 500 members, but no local is obliged to sub¬ 
scribe for stock in this wholesale association, and while the local associations buy 
largely from it, they do not buy exclusively from it and are not obligated to buy from 
it at all. As they are mostly stockholders, however, it is to their interest to buy from 
the wholesale association when they can do so to their advantage. 

The Central Union of German Konsumvereine is to-day very generally regarded as a 
pure Social Democratic organization, and while as a matter of fact the membership of 
the local associations is made up largely of working men and members of the Social 
Democratic Party, they have also many members of other political affiliations, such 
as office employees, lesser Government employees, etc. The Konsumvereine have 
grown with wonderful rapidity. According to the latest statistics there were in 1910 
a total of 1,109 local Konsumvereine, with a total membership of 1,171,763 and did a 
total business of $73,049,723. Of these locals, 675 held stock in the Wholesale Pur¬ 
chasing Association, which for the year 1910 did a total business of $21,104,376. The 
Kingdom of Bavaria, with a population of 6,887,000, had 94 local Konsumvereine with 
85,000 members, which in 1910 did a business of $4,284,000. 




COOPERATION AND COST OF LIVING. 


83 


Nuremberg is a distinctively manufacturing city with a population of 335,000, and 
its local Konsumverein is one of the most successful. This local Konsumverein, now in 
the tenth year of its existence, had at the close of its last fiscal year a membership of 
15,709. It operates 25 retail stores, owns and operates its own bakery and also a bot¬ 
tling plant for the bottling of beer and soft drinks. Its sales for the last fiscal yeai 
were $842,293. The association buys wherever it can do so to best advantage, but for 
the last fiscal year its purchases from the Wholesale Purchasing Association amounted 
$385,249. The last report of the local association states that its sales of bread for the 
year averaged about one-fourth cent per pound cheaper than the independent bakeries 
and that the saving in the cost of bread to its members was $18,995 for the year, and for 
bread, beer, and soft drinks the saving was a total of $40,890. The business of the 
association called for the employment of 226 persons. The net profits of the association 
for the year were $48,054. 

The business of the Konsumvereine is operated with the idea of selling first-class 
wares direct to the consumer at only reasonable profits, these profits later to be returned 
to the purchasers. To become a member of the association a person must buy one 
share of stock at $7.14 and pay an entrance fee of 11.9 cents. A member may pay 
cash for his share of stock or may pay at the rate of 23.8 cents per month until the 
same is paid for. In the latter case, $1.19 is annually retained from his share of the 
profits until the stock is fully paid. No one may own more than 10 shares of the 
stock of the association. There is also what is known as the emergency fund. This 
is a personal account with each shareholder and it is created, after a member’s share is 
fully paid, by the retention of one-fourth the profits due him until the amount reaches 
$23.80. The object of such fund is to provide for the member’s payments in cases 
of emergency, such as sickness, loss of employment, etc. On this fund 4 per cent 
interest is paid, as well as on the amount paid in on his shares of stock. Each member 
is also liable for a further $7.14 for each share he holds, but this is never called for 
except in case of failure and liquidation of the association. When a member with¬ 
draws from the association, the entire sum to his credit, reserve, emergency fund, 
etc., is returned to him with interest at the rate of 4 per cent. From the net profits 
are annually apportioned to reserve, extension, building, and other funds such amounts 
as the directors may decide upon, a dividend not to exceed 5 per cent is declared on 
the stock, and the balance is then divided among the members in proportion to the 
amount of goods purchased by them during the year. 

The opening of Konsumverein stores in practically every part of the city has forced 
reductions in the prices of almost every food staple. Retailers have been compelled 
to meet the Konsumvereine prices, as a rule, and as these prices are intended to give 
a reasonable profit, this has not worked any serious hardship. The independent 
dealers have, however, in many instances felt it necessary to offer some equivalent 
for the profit-sharing feature of the Konsumvereine and have rebate savings associa¬ 
tions—a scheme based upon cash sales with a rebate of a certain per cent—rebate 
checks or stamps being given with every purchase, which when they have accumu¬ 
lated to a certain amount, may be cashed at the offices of the rebate association. 

It follows naturally that the Konsumvereine have always met with much opposition 
from the independent dealers. In 1896 they (the retailers), succeeded in having a law 
passed forbidding the Konsumvereine, under heavy penalties, to sell to nonmembers 
of the associations. They have constantly, but up to the present time successfully, 
had to fight other proposed restrictive legislation. There have, too, been persistent 
efforts to have the Konsumverein stores taxed to the limit and this has been successful 
at least, so far as to have the dividends of members (the savings of their cooperative 
activities) taxed as income. In spite of such opposition, however, the Konsum¬ 
vereine have flourished, especially in industrial centers, and may be regarded as well 
established and beneficial organizations, which have very generally been important 
factors for the maintenance of normal prices of foodstuffs. 

In many parts of Germany there have been established what are called “Beamten- 
Konsumvereine ”—cooperative associations of some particular class of Government 
employees such as railway or post-office employees—which have been modeled very 
much upon the same plan as the Konsumvereine and with the same objects. These 
have everywhere been especially fiercely attacked by the independent retailers 
on the plea that the members, who are paid by the State, are attempting to destroy 
the great manufacturing and mercantile middle class, a class that pays a bulk of the 
taxes. This argument has had weight, and I believe that it may reasonably be stated 
that Governments have at least indirectly discouraged the organization of distinctively 
State employees’ associations of this character. There are no associations of this class 
in this district. 

The Siemens-Schuckert Electrical Co., one of the largest manufacturing concerns 
here, and which employs an average of 9,000 persons, operates a store in connection 


84 


COOPERATION AND COST OF LIVING. 


with its factories at which practically all foodstuffs are sold but only to employees 
of the company. This is not in any sense cooperative, but is operated frankly for 

E rofit by the company. The general verdict, however, is that it sells to its employees 
etter goods and at less prices than they could buy from the local retailers. The 
influence of this company’s store is also to keep the prices of the retailers of the 
immediate vicinity within the bounds of reasonable profits. 

George Nicolas Ifpt, American Consul. 

Nuremberg, Germany, December 23, 1911. 


BREMEN. 

Cooperative Societies. 

“SCHUHMACHER ROHSTOFF-VEREIN ” AND “ GENOSSENSCHAFT FUER VERWERTUNG 
DER INNEREN SCHLACHTVIEHORGANE ” AT BREMEN, GERMANY. 

The “Schuhmacher Rohstoff-Verein ” (Shoemakers’ Raw Material Society), was 
founded in the year 1868 by 6 members, and in the year 1889 it was changed into a soci¬ 
ety of limited liability. 

The object of the society is to purchase and to supply its members with all articles 
needed in the trade of a shoemaker. The business of the society is conducted by a 
board of managers, consisting of a manager, a comptroller, and a cashier; the members 
of the board of managers are nominated by the board of directors and elected by the 
general society. The board of directors is also constituted by the society and given 
the control over the board of managers. At present the society has 84 members, the 
membership having decreased during the last year. The reason given for this decrease 
of membership is the seemingly unfavorable terms of payment of the society, which 
are: Thirty days’ time, and after that 4 per cent interest per annum is charged. The 
decrease is, I believe, however, a natural consequence of the absorption of small fac¬ 
tories by large ones, the latter not needing the aid of such cooperative society. The 
society is not considered a strong competitor with other dealers in the same articles. A 
copy of the by-laws is inclosed herewith. 

The society handles only raw materials, chiefly German goods, which are not sub¬ 
jected to any changes, and sells also to nonmembers. The society paid 5 per cent 
dividends annually on its stock capital during the past two years, and a rebate of 5J 
per cent for goods purchased during the year 1910, and 6 per cent for the year 1911. 

German goods are generally purchased directly from the manufacturer, while foreign 
goods, such as American, French, and Belgian leathers, are purchased from local 
importing firms. 

The ‘ ‘ Genossenschaft fuer Verwertung der inneren Schlachtviehorgane ” (Society 
for the Utilization of the Intestines of Slaughtered Animals) is also a society of limited 
liability, founded in the year 1906 by 150 members, which number has now increased 
to 220. The object of the organization is indicated by its name, and in addition to its 
original purpose, it is also engaged in the purchase and sale of all kinds of butchers’ 
supplies, including tools and machines. The organization is that of a stock company, 
and the administration of its affairs is in the hands of a board of managers, which is sub¬ 
ordinate to the board of directors, elected by the general society. A copy of the by¬ 
laws of the society is herein inclosed. 

The sales of casings and other intestines amount in value to about $95,200, and the 
sales of supplies amount to about $35,000 worth annually. The society pays dividends 
on the sale of supplies, which vary from 15 to 20 per cent. On the sale of intestines 
during the last two years 48 per cent rebate was paid annually to the members. 

The raw materials are purchased partly from members at Bremen, or from importers 
at Bremen and Hamburg, as is the case, for instance, with casings. 

There are several dealers in casings in Bremen who find a very strong competitor in 
this society. 

Wm. Thos. Fee, Consul. 

Bremen, Germany, February 27,1911. 



COOPERATION AND COST OF LIVING. 


85 


BRUNSWICK. 

Brunswick’s Cooperative Societies. 

In Brunswick there are four cooperative societies called in German “Konsum 
Vereine, ” or in English “Consumers’ Unions.” The purpose of these societies is to 
reduce the cost of living to a minimum. Articles of food and clothing are bought at the 
lowest prices from wholesale dealers and manufacturers, or manufactured by the asso¬ 
ciation itself, and resold to the members at prevailing retail prices. After deducting 
the necessary expenses the profit is distributed among the members. In this way the 
commissions of middlemen, jobbers, retailers, and what not are dispensed with, and 
members obtain food and clothing at almost actual cost. The business capital of the 
association consists of the collective sum, usually 20 or 40 marks ($5 or $10) paid by 
each member to the common fund. Each member is liable for a like amount in case of 
the failure or insolvency of the society. Allowances are made at the end of the year 
for depreciation of property owned by the association and an amount is set aside out of 
the profits for a reserve fund. The societies are organized under a national law passed 
by the Reichstag and are not State institutions. 

UNIVERSAL COOPERATIVE SOCIETY AT BRUNSWICK. 

This is by far the largest and most important cooperative association in Brunswick, 
called in German “Der Allgemeine Konsum-Verein zu Braunschweig.” It is a reg¬ 
istered society, with limited liability, founded in 1890. For 10 years it had a hard 
struggle for existence, Enemies did all in their power to belittle the purposes of the 
association and the benefits which the members would derive from it. Pressure was 
brought to bear to influence the city magistracy and State government against it. 
Laws were passed imposing special taxes upon its sales. In the fiscal year 1910-11 
the society paid 8,485 marks ($2,000 round) trade tax and 20,883 marks (round $5,000) 
State and communal taxes. Great opposition was met from the rabatt sparvereine 
(the Rebate Savings Union) and from the Schutzverein fur Handel u. Gewerbe 
(The Protection Union for Commerce and Trade), which tried to have imposed upon 
the Allgemeinen Konsumverein a tax of 2 per cent upon its sales. Public meetings 
were held and petitions handed in to the legislature and city council protesting against 
the society. Much of the success of the society is ascribed to the widespread advertis¬ 
ing it received from its enemies in their attempts to suppress it. In 1890 it began its 
existence with 104 members. On June 30, 1911, it numbered 10,381 members. The 
society celebrated in 1910 the twentieth year of its existence and issued an elaborate 
report (copy inclosed) of its history with illustrations of its central establishment with 
steam bakery, coffee roaster, and warerooms. In addition to this central depot for 
household and manufactured articles there are 15 sales places in different parts of the 
city of Brunswick. 

Description of membership in 1911. 



Male. 

Female. 

Persons in business (manufacturers, mechanics’ dealers, keepers in livery stables)... 
Farmers . 

426 

113 

233 
8,085 

72 

234 

9,163 

43 

Professional persons (physicians, artists, authors, State and city officials). 

Persons in trade receiving salaries or wages. 

2 

580 

Agricultural employees. 

Persons without fixed calling living on income or pensions. 

Total. 

584 

1,218 



ORGANIZATION. 

According to its constitutions and by-laws, called “statuten” (copy inclosed), the 
Allgemeiner Konsumverein zu Braunschweig is organized in accordance with the 
provisions of the national law passed May 1, 1899 (Reichsgenossenschaftsgesetz). It 
is a registered corporation with limited liability. The purpose of the undertaking is 
the purchase as well as the production of the necessaries of life and household articles 
for the mutual benefit of the members of the association and the delivery of the same 
upon payment in cash. The manufactured and altered goods of its own production 
can be delivered also to nonmembers. The capital of the association consists of en¬ 
trance fees, fixed capital shares and the additions from the annual profits to credit 




















86 


COOPERATION AND COST OF LIVING. 


balance and reserve funds. The business is regulated: (1) By the executive com¬ 
mittee; (2) board of directors; and (3) general assembly. The executive committee 
consists of a first and second manager and a cashier. 

All officers must be ‘‘ Genossen’ ’ members of the association. The board of directors, 
consisting of 15, is elected by the general assembly and the directors appoint the 
executive committee or board of management. 

The duties of the different officers are succinctly provided for in the statu ten as well 
as the rights and duties of the members. The entrance fee is 1 mark (24 cents), the 
capital subscription of each member 40 marks. This sum can be paid upon entrance 
or one-tenth in one year and the full amount in installments within four years from 
entrance. In case of liquidation there is a further liability of 40 marks for each mem¬ 
ber. Each associate can have more than 1 share but not over 50 shares. The applica¬ 
tion of the net profit is annually determined by the general assembly. Goods are sold 
as a rule at retail market prices for cash. 

PURCHASE AND MANUFACTURE OF GOODS. 

The chief source of supplies of the Brunswick society, together with other associa¬ 
tions, mostly of the same name, “Allgemeiner Consum-Verein,” situated in other 
German cities, is the great purchasing company in Hamburg, “ Grosseinkauf Gesell- 
schaft Deutscher Konsumvereine, ” Wholesale Purchasing Co. of the German Con¬ 
sumers’ Unions. This is a corporation with limited liability, founded in 1893, which 
in 1910 supplied 675 different cooperative societies in Germany. 

The value of the goods bought from this company by the Brunswick association in 
1910 was 1,506,700 marks ($358,600). There is a soap manufactory recently estab¬ 
lished by the Hamburg company. The value of the soap produced from June 30 to 
December 31, 1910, was 1,367,834 marks or $325,546, and for the first six months of 
1911, 2,104,772 marks ($500,000). There are also three cigar factories belonging to 
the same company, which produced during the same fiscal year 30,113,000 cigars 
valued at 1,449,389 marks ($357,000). 

The Brunswick association purchases supplies from 11 other companies, which are 
cooperative manufacturing concerns producing chewing and smoking tobacco, men’s 
and boys’ clothing, shoes, etc. The Brunswick association has its bakery and coffee- 
roasting department. There is also a savings institution connected with it. 

SALES AND PROFITS. 

On page 27 of the annual report inclosed for the fiscal year 1911 of the Brunswick 
Allgemeiner Consum-Verein will be found a long list of the chief articles sold. They 
are largely those sold by American grocers, including alcoholic drinks, On June 30, 
1911, the shares of the members amounted to 299,550 marks ($71,400). The profits, 


269,450 marks ($64,260), were disposed of as follows: 

Marks. 

Statutory transfer to the reserve fund. 3,100.18 

4 per cent capital dividend on 9,540 marks. 381. 60 

8 per cent dividend to members on sales of goods (3,212,208 marks). 256, 968. 64 

Transfer to dispositions fund for benevolence. . 4, 000. 00 

Transfer to the special reserve fund. 5, 000. 00 


Total. 269,450.42 


Brunswick’s household union for civil officers. 

This cooperative society embraces 1,200 members. Each member contributes 20 
marks ($4.76), which constitutes the capital of the society. There is a liability of 
each member for the same amount in case of liquidation or insolvency. Purchases 
are made from wholesale dealers in Hamburg and other cities, in the same manner as 
retail dealers obtain their goods. The goods are sold to members with an addition of 
from 9 to 13 per cent on the purchase price, according to the nature of the article. The 
society does not purchase from the wholesale purchasing company of the consumers’ 
unions in Hamburg. After payment of expenses and a small transfer to the reserve 
fund the balance of profits is distributed in dividends among the members. The 
goods dealt in are principally groceries, including wines, liquors, and cigars, and 
notions, such as knitting worsted, buttons, and the like. Speculation as to the rise or 
fall in prices of goods purchased is forbidden the managing officers. A copy of the 
by-laws of the society is inclosed. 









COOPERATION AND COST OF LIVING. 


87 


THE TWO OTHER SOCIETIES. 

There are two other cooperative societies, namely, Beamten Consum Verein (Civil 
Officers’ Cooperative Society) and the “ Consum Genossenschaft der Bediensteten der 
Staatseisenbahn” (Consumers’ Association of the Employees of the State Railroad). 
No answer has as yet been received from either of them to a request for information, 
but their organization is probably like that of the last cooperative society described. 

PROGRESS OF COOPERATIVE SOCIETIES. 

The Central League of Consumers’ Unions, “der Zentralverband deutscher Con- 
sumvereine,” held a meeting in Leipzig from the 19th to 21st of June, 1911. During 
the year 1910 the number of unions increased from 1,077 to 1,109. The number of 
members from 1,047,975 to 1,171,763, an increase in one year of 123,788. The sales of 
goods increased from 273,371,303 marks ($65,000,000) to 307,000,000 marks ($73,000,000), 
an increase of $8,000,000 in one year. The increase in the sales of articles manufactured 
by the societies was from round 45,000.000 to 53,500,000 marks (from $10,500,000 to 
$12,500,000), an increase of $2,000,000 during the year. 

The extension and improvement of the fire insurance department of the societies, 
which had proved successful, was a matter of consideration at the meeting. The net 
profit of the publishing department was 70,464 marks ($16,760). 

OPPOSITION TO COOPERATIVE SOCIETIES. 

The 10 years’ struggle against its enemies of the “Allgemeiner Consumverein zu 
Braunschweig ” has already been described in the first part of this report. The feeling 
of the retail dealers, of the grocers, bakers, and small merchants of all kinds against 
the cooperative societies in Brunswick remains. On the 25th of March, 1911, a large 
public meeting was held in Brunswick under the auspices of the Niedersachsische 
Schutzverband fur Handel u. Gewerve (The Low Saxon League for the Protection of 
Commerce and Trade), which has its seat in that city and represents the interests of 
the middle business classes of the city and State, to protect against the civil-service 
cooperative societies. The attacks are now more directed against those societies than 
against the socialistic societies of the laboring classes. The civil-service associations 
defeat themselves in claiming that their societies are founded in the spirit of the age, 
of which great capitalistic combinations and workingmen’s unions are the prevailing 
characteristics. They unite for the purpose of buying the necessaries of life at the 
cheapest prices. The larger capital at the disposition of the cooperative societies 
enables them to buy articles at more advantageous rates and of a better quality than 
it is possible for the small dealer. 

Talbot J. Albert, Consul. 

Brunswick, Germany, January 24, 1912. 


STUTTGART. 

Cooperation and the Cost of Living. 

There is one large cooperative association in Stuttgart, viz, The Spar- und Consum¬ 
verein, having 32 grocery stores, 1 bakery, 1 shoe store, 1 yarn store, several coal and 
wood yards, and also a wine business. This association has a very large membership, 
especially among the laboring classes. Anyone can become a member upon payment 
of 30 marks ($7.14). If a prospective member is not able or willing to pay 30 marks 
he may deposit the sum of 1 mark (23f cents), and the balance of 29 marks ($6.90) will 
be retained by the association from his share of the profits. This sum of 30 marks 
must be kept on deposit with the association. Brass coins with the amount of the pur¬ 
chase stamped thereon are given to purchasers, and the value of the coins is entered 
in the books of the members at the general office. This is done weekly or monthly. 
The association pays from 6 to 8 per cent at the end of the year on the amount entered 
in the books of the members. With the exception of coal and wood, no domestic 
supplies are delivered to members. The cooperative associations purchase their sup¬ 
plies directly from producers. The independent retail merchants have a cooperative 
purchasing association and are purchasing their supplies through this asociation 
directly from the producers, thus saving the profits of the wholesale merchants. Most 
of the independent retailers are also members of the discount savings association. 
The members of this association give trading stamps for the full value of the purchase, 
and the sum of 10 marks ($2.38) is given for 200 marks ($47.60) worth of trading stamps 



88 


COOPERATION AND COST OF LIVING. 


(5 per cent). The difference in the prices of the cooperative stores and the independent 
stores is no more than 1 per cent and in some instances less. Cooperative associations 
are in all the large cities, towns, and in some of the larger villages in this consular dis¬ 
trict. While the cooperative stores (Consumvereine) in Stuttgart are under one man¬ 
agement, the cooperative stores outside of Stuttgart are under separate management. 
There is keen rivalry between the independent storekeepers and the cooperative 
associations. 

Edward Higgins, Consul. 

Stuttgart, Germany, January 11, 1912. 


MAGDEBURG. 

Cooperative Society op Fried. Krupp Aktiengesellschaft Grusonwerk, 

Magdeburg, Germany. 

This institution is known as the “Konsum-Anstalt von Fried. Krupp Aktiengesell¬ 
schaft Grusonwerk,” and is located in this city. 

The institution deals in manufactured goods, dry goods, groceries, manufactured 
wares, and other articles for household use, of the best quality and the lowest possible 
price. 

The firm furnishes the house, including its installation, free of rent. Any addi¬ 
tional furniture or furnishings must be bought by the institution from the profits. 
These profits must, however, cover also the amortizement and maintenance. Furni¬ 
ture and utensils remain the property of the firm. 

The institution is managed by an employee of the firm, whose salary is included in 
the running expenses of the institution. 

Complaints regarding the sale of goods, as any defects in the goods, etc., are to be 
made to the manager of the institution. If such complaints are turned down by him, 
they may then be sent to the direction of the firm. 

All goods are sold at current prices prevailing in the city and the profit after the 
general expenses have been deducted is to be divided among the purchasers in the 
form of a rebate. This rebate is to be fixed by the firm according to the amount of 
credit balance of the institution, and after being published will be paid in cash. 
Any complaints concerning the amount of rebate will not be considered. The manner 
in which the rebate is to be paid out is determined by the manager of the institution. 
(The average rebate has been from 10 to 11 per cent.) 

Goods are sold for strictly cash and no credit is given.. Goods are only sold to em¬ 
ployees of the firm and members of their family upon presentation of a card. Notifi¬ 
cation of the loss of such a card is to be made at once. Cards are not transferable, and 
any misuse of the card entails the withdrawal of the same, and all members are sworn 
to report such abuses thereof. 

In the purchasing of goods trading stamps are given, in which all sums are rounded 
off to 5 and 10 pfennigs ($0.0119 and $0.0238). These stamps are only good in the year 
in which they are issued. 

Small stamps of from 20 to 40 pfennigs ($0.0476 to $0.0952) are to be cashed in ex¬ 
change for higher denominations as soon as the sum of 10 marks ($2.38) has been 
reached. 

The payment of the rebates accumulated during the business year ending June 30 
is made upon the return of the trading stamps in the last three months of the calendar 
year at such time as the manager may fix. All claims for rebate are invalid if pre¬ 
sented after December 31 of each calendar year. 

Ernest L. Ives, 

American Vice Consul. 

Magdeburg, Germany, January 24, 1912. 


CHEMNITZ. 

The “Verein Volkshaus” for Chemnitz and Vicinity. 

The “Verein Volkshaus” is an association with limited capital, organized in Chem¬ 
nitz, July, 1902, for the purpose of acquiring a building and grounds, which should 
be a workingmen’s club. Here the various trade organizations could hold their meet¬ 
ings without being subject to certain annoyances from owners of halls, who had fre¬ 
quently refused to rent then* places to these labor organizations or else placing certain 
restrictions upon them. The various Socialist trade organizations furnished the 
capital, lending itto the “Verein” for an indefinite time, part of it without interest. 





COOPERATION AND COST OF LIVING. 


89 


PRESENT QUARTERS—THE BUILDING. 

The present quarters are situated in the southwestern part of the city, building and 
grounds, with equipment, etc., valued at 855,174 marks ($203,532), and is in many 
respects quite up to date. 

In the building is a la r ge restaurant, which sells beer, wine, etc., to members and 
others at a reasonable ra f _. There are bowling alleys, billiard tables, reading room, 
baths, and also 53 beds for lodgers. While the general intent of the club is a meeting 
place for all workingmen, it is actually an arm of the Social Democrats, and in this 
sense is a political organization. 

The building is divided into two sections, the one a sort of hospice for wandering 
workmen, and the other an open public restaurant and hotel. The portion reserved 
for the itinerant workers is called “herberge,” and serves the purpose of an institution 
for the aid of strange workmen in the city, who have traveled from distant parts of 
Germany, or in fact any portion of the Continent, seeking work wherever it can be 
found. 

In the building are also the offices of the various labor unions, where the executive 
work is handled. Thus the metal workers’ union, brewery employees, carpenters’ 
union, etc., all have their separate offices for their delegates and members. Here the 
delegate is to be found each day at certain specified hours, ready to hear any grievances 
from men of his particular trade union. Some of these offices are finely equipped 
suites of rooms, with a large circulating library for the general use of the members. 
Here are to be found books on all subjects tending to elevate the intellect and character 
of the workmen. Not only are there books on the particular branch of industry or 
trade in which this union is interested, but splendid books on political economy, 
philosophy, classics, etc., are found upon the shelves for distribution among its 
members, and they are widely and generously made use of. 

A finely equipped and spacious auditorium, with a capacity of almost 2,000, is the 
feature of the building. Here assemblages are held, entertainments and dances are 
given, and at election time it is of course used for discussions, debates, and rallies of 
the Social Democratic Party, who found it very difficult, almost impossible, to secure 
a hall of sufficient size to carry on their conventions, demonstrations, etc. Besides 
this vast auditorium, there is a large plot of ground, adjoining the property, fitted up 
for picnics and parties for the workmen and their families. Here are tables where 
refreshments are served, and a well constructed sort of platform or stage, where music 
and at times entertainments are offered, during the summer, by the various trade 
unions for the members of the “volkshaus.” 

ITINERANT WORKMEN. 

The workings of the unions with reference to these itinerant workmen may be of 
interest: Upon arrival in Chemnitz the workman calls at the office of the union of his 
trade, and upon showing his union book, he is given 1 mark. He then goes out and 
searches for work. In the evening he returns to the “herberge” of the “volkshaus,” 
where he is given a room for the night (costing him 40 pfennigs), including bath. In 
the morning he can secure a cup of coffee for 7 pfennigs and a roll, and again he starts 
in search of employment. Again he secures his 1 mark for the day. This he can 
repeat for three days, and if he has not found work during this time, he travels (as a 
rule walking) on to the nearest city. 

The “herberge ” lodging-house is of course run at a loss, but this deficiency is made 
up by the various trade organizations, who each contribute an amount to cover up this 
deficit at the end of the year. 

ACQUISITION OF MEMBERSHIP. 

Each member is expected to take a share in the “verein,” which costs 30 marks 
($7.14). This he can pay at once or in installments, and at least 5 marks ($1.19) must 
be paid every year. A member can subscribe up to 20 shares. The shares draw 
interest as fixed by the board of directors and managing committee. Two years notice 
must be given, if a member wishes to withdraw from membership in the “verein.” 

ORGANIZATION. 

The general meeting is called by a notice in the “volkstimme,” the organ of the 
“verein” by the board of directors and the managing committee at least 14 days prior 
to the meeting and again a second notice must be inserted at least 24 hours before the 
meeting. If any members desire that a special meeting be called, one-tenth of the 
members can demand the same. 


90 


COOPERATION AND COST OF LIVING. 


The general meeting determines: (1) Complaints against the board of directors and 
managing committee. (2) Amending by-laws. (3) All expenditures over 5,000 
marks ($1,190). (4) Purchase and sale of property. (5) Salaries. Compensation of 

board of directors and managing committee. (6) Approving financial accounts and 
dividing profits. (7) Charges against directors or managing committee, and, if ap¬ 
proved, dismissed from their office. (8) Election of board of directors and manag¬ 
ing committee. (9) Interpretation of statutes. (10) Complaints regarding the exclu¬ 
sion of members. 


THE AUFSICHTSRAT (BOARD OF DIRECTORS). 

The board of directors consists of nine members elected for three years, and every 
year one-third go out of office, or are reelected. Dealers selling to the “verein” ana 
employees are not allowed to become members of the board of directors. The direc¬ 
tors select a chairman and secretary and substitutes. They meet once every quarter. 

THE “VORSTAND” (MANAGING COMMITTEE). 

This consists of five persons: Chairman, a vice chairman, cashier, and two members, 
serving for three years. Their term begins and ends with a calendar year. They are 
intrusted with the general business management, looking after such details as book¬ 
keeping, finances, care of objects of value, merchandise, and other property. 
Three constitutes a majority. At the end of the fiscal year the accounts are sub¬ 
mitted to the board of directors for examination. They submit a report on finances, 
etc., to the general meeting. 


JOINT MEETINGS. 

Every three months a joint meeting is held by the board of directors and the man¬ 
agement committee and here is determined: (1) Expenditures from 300 to 5,000 
marks ($71-$1,190). (2) Hiring or discharging employees. (3) Agreements which 

require running expenditures in so far that these are not prohibited by the general 
meeting. (4) Methods or system of bookkeeping. (5) Investing idle funds. (6) 
Investing reserve funds. (7) Taking up loans. (8) Exclusion of members. 

FINANCIAL. 

The 30th of June a yearly statement is made by the managing committee and sub¬ 
mitted to the board of directors, who approve and submit to general meeting. The 
reserve fund must amount to at least 10,000 marks ($2,380); this is to cover up any 
loss. The reserve fund belongs to the association until dissolved; those leaving earlier 
are not entitled to a division. Dividends from shares which are not called for after 
two years become the property of the association. 

W. W. Brunswick Vice Consul. 

Chemnitz, Saxony, January 29, 1912. 


LEIPZIG. 

Cooperation and the Cost of Living. 

The Spar und Gewerbebank at the City of Leipzig— An Incorporated Society 

with Unlimited Liabilities. 

The Spar und Gewerbebank of this city is a cooperative association, managing 
banking business for the purpose of mutual providing of moneys necessary for"the 
trade and economy, upon common credit, by granting advances "of money, discount¬ 
ing bills of exchange and other papers on order, by taking and keeping saving and 
deposit moneys, etc. 

The association has its domicile at Leipzig, Germany, subjection to the courts of 
the city of Leipzig. The working capital of the association is formed by shares, paid 
in by the members and the proportion of profits made, and is divided in: 

1. The actual property of the association, which belongs to the commonalty and 
which serves partly: (a) As a reserve fund; and (b) as a fund especially for the pay¬ 
ment of uncertain claims or losses in particular business branches; and" 

2. The shares and credits of the several members. Besides this, money of non¬ 
members is also accepted as deposits for the purpose of increasing the working capital 
if the extension of the business transactions require it. 



COOPERATION AND COST OF LIVING. 


91 


The association settles its affairs self-dependent under the assistance of its members. 
Its organs are the board of directors, the committee, and the general assembly. 

To acquire membership, the petitioner must sign an absolute declaration of acces¬ 
sion, and needs for admission the allowance of the board of directors and of the com¬ 
mittee. The board of directors has to submit the declaration of accession to the court 
for registration in the list of consorts. The membership of the entering person will be 
established by this registration. Qualified for admission are all persons residing 
within the German Empire who can bind themselves by contracts, and also com¬ 
mercial companies. Petitioners having been rejected by the board of directors and 
the committee can only appeal at the general assembly. * 

Termination of the membership can only take place at the end of the year and 
only in consequence of the registrations in the list of consorts by the court, upon the 
request of the board of directors, stating the reasons for leaving the association. A 
transfer of membership or business credit is inadmissible according to the law relating 
to cooperative associations. The voluntary retiring takes place after a written notice 
has been given by the consort at least six months before the end of the year. A mem¬ 
ber who emigrates to another country is not bound to give a six months’ notice, 
as well as the association can inform such member in writing that it has to retire at 
the end of the year. 

An exclusion of the association can take place (a) on account of civic degradation; 
(6) on account of nonfulfillment of the statutory obligations, especially if, in spite of 
a repeated monition, more than three monthly contributions have not been paid; 
(c) if a member, by not repaying a loan, has forced the association to bring suit against 
him, or if he caused damage and losses to the association or a bailsman; (a) if a mem¬ 
ber becomes insolvent; ( e) if he is a member of another credit association. 

The exclusion takes place by a decision of the general meeting. In such cases as 
stated above under (a) to (c) the exclusion must be proposed by the board of directors 
and the committee. In the cases under ( d ) and (e) a proposal for exclusion can be 
made by the said organs. - The fact of an exclusion must be submitted without delay 
to the consort by a registered letter. From the time of mailing the letter the consort 
can not join any more the general meeting. Death will end the membership at the 
close of the year in which it occurs. The board of directors is compelled to report 
such death without delay to the court for correction of the list of consorts. 

The affairs of the retired member or his heirs will be settled on the base of the 
annual balance. The member or his heirs will receive the balance of the account, 
inclusive of the share of dividends for the last year, within six months after the end 
of the membership. If the association was in loss, the member’s share of such loss 
will be deducted before the settlement is made. If, however, the whole property 
of the association, together with all reserve funds and all business credits of its mem¬ 
bers, will not be sufficient to cover the debts of the association, then the retired mem¬ 
ber will not only be liable with his own business balance, but will have to pay the 
share per capitatim to cover the deficit. 

The members of the association are entitled (a) to vote at the general meetings 
for or against all resolutions and elections; ( b ) to make use of all accommodations 
established by the association for the promotion of credits of its members, according 
to the regulations and disposable means; and (c) to request a dividend of the business 
gains at the end of the year. 

On the other hand, each member is compelled (a) in order to erect his share on 
business to make the payments prescribed by the regulations; (6) to pay an admis¬ 
sion fee; (c) not to act contrary to the statute, the resolutions, and the interests of 
the association; and (d) to be personally liable with his whole property for the ful¬ 
fillment of the association’s responsibilities. 

The business share of each member is fixed at 500 marks ($119). This share can be 
paid in, in full at the time of admission, or in monthly installments of at least 1 mark 
($0,238), so that at least within 50 months 50 marks ($11.90), or one-tenth of the 
total share will have been paid in. Already before the maximal amount of 1 share is 
reached, the account of each member will be credited with its portion of the annual 
dividend, and of a commission of 2 per cent of every business transacted by the asso¬ 
ciation. 

Each member receives a personal book wherein the entrances of his account will be 
transcribed. Any cession, pawning, or other charge against such bank book is, as 
far as the business credit of the member is still in the cash of the association, not bind¬ 
ing for it. This notice is especially reprinted on each bank book. 

Original shares and rates of shares, which have not been taken off within three 
years after their expiration will, after having been published twice within two weeks, 
in a Leipzig paper, be forfeited to the reserve fund. 

The reserve fund serves to cover losses and should be kept always at an amount 
equal to 10 per cent of the total activa. It will be created from the admission fees of 


92 


COOPERATION AND COST OF LIVING. 


new members, the fixed proportions of the net profits, and such original shares which 
have not been taken off within three years after their expiration. 

The admission fee for new members will be fixed from time to time by the general 
meeting. At present 15 marks ($3.57) will be charged. 

As far as the members’ demands for credit require it, the association takes also 
deposits against obligations on the name and savings money on books. It opens 
business connections with banking houses and other associations. It offers to its 
members loans on fixed terms, discounts bills of exchange, and keeps accounts with 
or without credit allowance. It transacts money businesses for its members on com¬ 
mission. 

The association can acquire real property only for the purpose of having its own busi¬ 
ness place, and temporary quarters as security for endangered claims. State and other 
papers of value can only be purchased by the association for the investment of the 
reserve funds, or for the temporary use of unapplied cash. All speculative operations 
on stocks are excluded. 

Credit is only given to members as far as their solvency allows it and only against 
sufficient securities. To members of the board of directors credit will be given only 
with the permission of the committee, and to members of the committee credit can 
only be allowed upon a resolution of both the board of directors and the committee. 

Security for credit allowances can be procured by putting in one or more bondsmen, 
by pawning or transferring claims which must be secured by mortgages, by pawning 
solid Government and other papers, and by bond mortgages for credits on running 
accounts and for building credits. 

Of the net profits, remaining after payment of all business expenses and losses, 
first of all the reserve fund will receive 10 per cent; the remainder will, if the general 
meeting has not proposed any special allowances for public and benevolent purposes, 
be paid or credited to the members as a dividend in order to reach the fixed business 
share of 500 marks ($119) if only monthly installments were paid in. 

If there should be a decrease in the annual balance, the losses must be, first of all, 
paid out of the reserve funds, and, if there is not sufficient money, proportional shares 
will be taken from the accounts of the members. If there still remains an unpaid loss, 
the members are compelled to pay in equal portions per capitatim, and in such a 
case the board of directors and the committee have to invite a general meeting for a 
resolution to dissolve the association. 

The dissolution of the association takes place: (a) By a resolution of the general 
meeting. (6) By a decision of the court, if the membership stands below seven mem¬ 
bers and has not gained this number again within six months, (c) For the opening 
of the bankruptcy proceedings of the association. ( d ) By a decision of the adminis¬ 
trative court in cases such as are provided for by the German law relating to cooperative 
associations. 

The Leipzig Spar und Gewerbebank exercises the following business branches: 
Savings depositions at interests of 2\, 3, 3^, 4, and 4^ per cent, according to the recall¬ 
ing of capital. Check accounts, free of charge, at interests of 2\ per cent. Discounting 
and cashing bills of exchange and checks. Credits on running account or on drawing 
account against security by bail or pawn. Lends on Government and industrial 
bonds and on all saving-bank books of German saving banks. Opening of unlimited 
credits against mortgage securities without broker’s commission. Loans of money 
against security by bail or pawn, Purchase and sale of Government and industrial 
bonds. Clearing and check business. Pay and exchange office for coupons and coins. 
Execution of all banking transactions. 

The annual report of the association says: The result of the business year 1911 is an 
entirely satisfactory one. The association is on a steady raising way/ The transac¬ 
tions of business during the year 1911 amounted to $10,533,130.50, against $9,050,134.30 
during the last year, an increase of $1,481,996.20. The net profits amounted to 
$18,554.50, as against $17,083.15 during last year, an increase of $1,471.35. 

The property account shows the sum of $153,197.27 and the reserve funds amount to 
$86,703.40; in all, $239,900.77 of own property. 

During the year 316 new members were admitted and 233 left freely; the association 
had 2,911 members at the end of the year 1911. 

The demands and wishes of the great number of members could be fully complied 
with and a dividend of 6 per cent has been paid to the members. 

Rudolph Fricke, 

American Vice Consul. 

Leipzig, Germany, March 30, 1912. 


COOPERATION AND COST OE LIVING. 


93 


KEHL. 

Cooperation and the Cost of Living. 

Of organizations of consumers in this district to reduce the cost of living, there are 
two distinct sorts. One is composed of the members of a single large factory or indus¬ 
trial plant, is often conducted by the administration of the factory, and being simple 
in its working may be passed oyer with but a few words of explanation. Of this type 
there are perhaps 30 in the district. The administration of the organization buys 
at wholesale whatever goods are sufficiently in demand to entitle the purchaser to 
wholesale prices. The workman gets these goods at the price paid for them (the fac¬ 
tory often pays even the expenses of the shop). He can order what he likes throughout 
the week, within the limits of his wages, without paying for his purchases. Then at 
the end of the week, when he receives his wages, he must pass out through the “shop ” 
and settle his weekly account. The mere fact of being on the pay roll of the factory 
entitles him to all these privileges. 

The second type of such organization is the “Consumverein,” a cooperative society 
in the true sense of the term, being, so to say, an organization of the people, for the 
people, by the people. This takes the form of a stock company. To enjoy the privi¬ 
leges offered by this type of organization, a man must be a stockholder therein. Every 
stockholder has a voice in the election of the “vorstand ” or administrative board, and 
in the “aufsichtrat,” which is at once a sort of auditing committee and board of 
supervisors. 

To avoid repetition in the reports, it may presumably be considered unnecessary 
to touch at any length upon the relations between the local society or Consumverein 
with the “Central Verband,” or Central League of German Cooperative Societies, 
which is in Hamburg, and with its subsidiary organizations, the “Revisions Verband,” 
or Provincial Administration, and the “Wholesale Buying League of the German 
Cooperative Societies.” Suffice it to say that every local society regularly formed 
has the right to enjoy the privileges offered by the Central Verband, among them being 
the right to buy through the “Wholesale Buying League” and to get its supplies from 
the factories of the Central Verband. 

Coming to matters purely local, there are in this consular district 33 such organiza¬ 
tions entitled to the privileges offered by the Central League and its subsidiary societies. 
For the year 1910 the 33 societies had a total membership of 21,241. It is a fair pre¬ 
sumption that this represents the number of families served by the Consumverein, 
rather than the number of individuals so privileged. During the same year the total 
of business done was 6,917,587 marks ($1,750,000), and the total of dividends declared 
at the end of the year was 505,552 marks ($121,000). The average per member of 
business done was 325.67 marks ($77.50), and the average annual dividends declared 
for that year was 23.79 marks ($5.70). As will appear later, however, the annual 
declared dividends do not represent the total saving to the members of the organization. 

Regarding the actual working and the results of these cooperative societies in this 
district, the Consumverein of Strassburg and vicinity may fairly be taken as a model. 
This society was organized in 1902, with the object of furnishing its members with 
better qualities of life and domestic necessities at a price as near the wholesale price as 
possible, of ultimately organizing its owns plants for the production and manufacture 
of such domestic necessities, of accepting the savings of its members, and of construct¬ 
ing dwelling houses for the use of its members. It was a stock company, with shares 
as 30 marks ($7.14), the proceeds of the shares being assets of the company, bearing 
interest at 4 per cent. The shares are either fully paid or subject to call. Any man can 
become a member by the payment of a fee of 50 pfennige ($0.12), and after such pay¬ 
ment is entitled to the full privileges of the organization, including a vote at the annual 
general assembly. But he must pay at least 6 marks ($1.43) of his share of 30 marks 
by the end of the first six months or he is dropped. After that the rest of his payment, 
if deferred a longer time, will be withheld to the extent of 5 marks per year from his 
annual dividends, until the full payment of 30 marks has been made. As noted above, 
interest at 4 per cent is granted on all money paid in on account of shares. 

There are three administrative officers elected by the members at their annual 
assembly, namely, the cashier, the controller, and the business manager. These offi¬ 
cers are subject to a board of supervisors likewise elected by the general assembly of 
members, whose duty it is’ to advise the administrative officers and to check their 
work, although this board has no active part in the administration of the society. The 
disposition of the profits of the organization is a matter settled not by a board, but by 
the members in their annual assembly. 


94 


COOPERATION AND COST OF LIVING. 


The wares furnished to the members are obtained from three distinct sources: (1) 
From the factories of the Central Verband and its subsidiary wholesale buying 
league, as mentioned in a preceding paragraph. (2) From its own local factories and 
supplies. (3) From local firms with which the society has a special contract. For 
the year 1910-11, out of a total of business done by the Strassburg Consumverein of 
1,138,000 marks, 280,000 marks’ worth of merchandise was obtained from the first source, 
603,000 marks’ worth was obtained from the second source, and the balance, 255,000 
marks’ worth, was obtained from the third source, from local firms with which the 
society has contracts. The word ‘ ‘ supplies, ” in source No. 2, above, refers to such things 
as can be bought readily at wholesale in the local market and retailed from the society’s 
own shops and warehouses, such as potatoes, coal, and the like. Goods obtained by 
contract with local firms refers to such merchandise as can not be readily kept in stock 
by the company itself, but on which local merchants are willing to grant a discount to 
members, such as clothing, finer dry goods, and the like, for the sake of getting their 
extensive patronage. 

The only local factory now in operation is the bakery. At the present time the 
society maintains three small bakeries in different quarters of the city, in rented build¬ 
ings. During the year these bakeries had an output of 1,556,000 pounds of bread, 
which they sold, with a small profit, at 1 pfennig per pound less than the ordinary 
market price. This represents a saving of 15,000 marks ($3,100), besides the profit to 
be divided at the end of the year. Now the society is building its own large bakery 
(from its reserve fund and a mortgage) on the outskirts of the town, with an estimated 
capacity amply to meet the demand of the members and to leave a surplus to be dis¬ 
posed of to nonmembers at the regular market price, thus increasing the profits of the 
organization besides furnishing bread cheaper to its own members. 

The actual saving to the members of the organization can not be accurately esti¬ 
mated. The object of the organization is not, in the first instance, to sell goods 
cheaper in all cases; it is rather to furnish better qualities and fairer weights at such 
price as will actually cover all expenses. Sometimes this price nearly equals the 
general market price for inferior qualities; sometimes it is markedly cheaper. As 
soon as the Central Verband gets its own factories and sources of supply for all ne¬ 
cessities of life, then in all probability the actual selling price will be cheaper, and, 
moreover, the individual members will share in the profits of the central and of the 
local organization as they do at present. 

The chief financial benefit accruing to a member of a Consumverein here at present 
is the division of the profits at the end of the year—just as if the member were a part 
owner in a line of retail groceries. At the end of the year a balance is made, the 
report of which is considered at the annual assembly of all the members, and a vote 
is then taken as to the disposition of the profits. For example, the total profits on 
this year’s business (year ends September 30) of 1,138,000 marks ($300,000) were 
89,476 marks ($21,300). This was divided as follows: 


Marks. 

4 per cent interest on shares paid up. 1, 634. 20 

Reserve and building funds. 18,190. 00 

Additional compensation to clerks. 800. 00 

For charitable purposes. 500. 00 

Carried forward to next year. 92. 92 

6 per cent dividends on business done. 68, 258. 88 


Total... 89,476.00 


The dividends are divided among the members pro rata of business done with 
the organization. For example, a member who buys 500 marks’ worth throughout 
the year will receive 30 marks as his share of the profits. Out of a total of 4,855 mem¬ 
bers, for some unexplicable reason, only 3,063 bought from the society, and were 
therefore, entitled to a share of the profits. This represents a mean of business done 
of 371 marks ($88), a mean actual profit of 29.21 marks ($6.95), and a mean dividend 
of 22.26 marks ($5.30). 

The distribution of the merchandise to the members is done through retail shops, of 
which there are 11 throughout the city, maintained by the society. In these shops are 
kept the wares obtained from the company’s local sources of supply and from the Cen¬ 
tral Verband at Hamburg. The company also has contracts with 49 local firms (source 
three above). Goods obtained from local firms with which the society has contracts 
are bought by the members directly from the various firms, on the account of the 
Consumverein. 










COOPERATION AND COST OF LIVING. 95 

The following table sets forth the growth of the society since its beginning in 1902: 


Years. 


1903 

1904 

1905 

1906 

1907 
1908. 

1909 

1910 

1911 


Number 
of mem¬ 
bers. 

Total of 
business. 

Actual 

profits. 

Expenses. 

511 

$56,620 

$2,512 

$8,869 

608 

92,696 

1,876 

15,199 

677 

101,180 

3,063 

15,761 

774 

110,657 

4,251 

17,193 

975 

130,511 | 

6,751 

15,311 

1,435 

200,829 

13,092 

23,016 

2,199 

349,787 | 

22,318 

33,290 

3,360 

670,173 

52,522 

53,992 

4,855 

1,137,648 

89,476 

89,588 


Reserve 
and build¬ 
ing fund. 


81.50 

937.62 

1,305.62 

1,630.12 

2,050.62 

3,064.12 

5,452.87 

9,227.44 

21,348.09 


The membership list is composed of all classes of people, from day laborers to 
professional men. There is no limitation of membership on this score, but the 
majority of the members are artisans and clerks. 

Independent retailers look on the society with a great deal of disfavor. At its 
inception the society had to cope with a great deal of adverse publicity, in which 
the mdependent dealers forcasted the immediate bankruptcy and failure of the 
company. But now that the success of the scheme is assured these tactics have 
been abandoned and the independent dealers try to meet the competition by various 
methods, such as extraordinary discounts and a system of trading stamps, redeem¬ 
able for cash. The movement is also widely criticized as being distinctly of social¬ 
istic tendencies, and therefore, from the point of view of its critics, a thing to be 
checked before it grows too strong. 

Warren E. Schutt, 
American Vice Consul in Charge. 

Kehl, Germany, December 14 , 1911. 


BREMEN. 

Cooperation and the Cost of Living at Bremen, Germany. 

The problem of reducing the cost of living is one that has to be solved in Germany 
more necessarily than in any other country. That this idea has gained a strong foot¬ 
hold is proven by the fact that according to the business directory of the German 
Empire there exist at present Konsum Vereine (cooperative societies for articles 
of consumption) in 4,392 communities of the Empire. 

In Bremen such a Konsum Verein was founded in the year 1870 by 31 members, 
and the success of it is not only shown by its growth in regard to number of members, 
but more so by the constantly rising percentage of dividends paid to the members 
and the amounts of sales and savings. 

The growth of the Bremen Konsum Verein is shown by the following table: 


Years. 

Popu¬ 

lation. 

Number 
of mem¬ 
bers. 

Divi¬ 

dends 

paid. 

Amount 

of 

sales. 

Amount 

of 

savings. 

1870. 

95,946 
124,152 
144,144 
180,871 
244,875 

31 

2,589 

4,456 

11,337 

10,964 

Per cent. 



1880. 

5£ 

8* 

$i57,960 
350,069 
652,882 
• 713,048 


1890. 


1900 . 

$34,673 

47,029 

1910. 



The organization of the Konsum Verein is that of a stock company. Member¬ 
ship is attained by making a deposit of 25 pfennig and by paying 25 pfennig for a 
savings deposit book, in all 50 pfennig, or 11.9 cents. This gives the member a right 
to purchase goods in the stores of the society and entitles him to his share of the 
dividends. 

For each purchase made in the stores of the society the buyer receives a certificate 
in form of a small card showing the amount of the purchase. At the end of the cal¬ 
endar year the members pass in their cards and receive the dividends due thereon. 





































96 


COOPERATION AND COST OF LIVING. 


Of these dividends 3 marks ($0.72) are detained from each member and credited to 
his saving account, until the sum of 30 marks has been reached. From then on the 
full dividend is paid out every year. The savings bear interest at the rate of 5 per 
cent per annum. 

As the name of the society indicates, it is founded for the purpose of cooperative 
purchase and distribution of articles of consumption—fuel and everyday necessaries 
of the household. All business transactions, purchases as well as sales, are made 
strictly against cash. During the year 1910 the stock capital was converted 36 times. 
The purchases are made in the ordinary business way, and the sales and the distri¬ 
bution of the goods take place in 26 stores, which the Konsum Verein has established 
in various parts of the city. 

The goods kept for sale in these stores are of the kind needed in the households of 
the middle and the poorer classes of the population. The prices charged are not 
excluding competition, and the advantage which the members of the Konsum Verein 
enjoy is expressed in the percentage of dividends paid, which, since the foundation 
of the society, has been much higher than any rebate given by independent store¬ 
keepers for cash purchases. In general, I believe, the Konsum Verein is considered 
to be a fair but sharp competitor, whose main achievement, to do away with the 
credit system, has proven a blessing to many families. There exists no other similar 
cooperative society in Bremen. 

Frederick Hoyermann, Vice Consul. 

American Consulate, 

Bremen , Germany , December 6, 1911. 


STETTIN. 

Sir: Your letter of February 24 (July came to hand, and in compliance with your 
request I beg to give you the following report re Schneider Werk Genossenschaft of 
this city. Statut you find inclosed. Besides, I learn that this Genossenschaft is 
somewhat connected with the Hirsch Dunkers Genossenschaft and Christlich Socialer 
Verband. 

These three march apart but fight together, as, in fact, the principal purpose of the 
Schneider Werk Genossenschaft seems to be to strengthen their position against the 
“Arbeitgeber.” For this purpose they have a Strike Kasse, into which they pay 
each 1 mark weekly. They also have their Krankenkasse; also Begrabniskasse. 

They work mostly “auf Accord” as per tarif only exceptionally on “Tages” or 
“ Stundenlohn ” especially in case of Reparaturen 40 to 45 pfennigs the hour. 

Some masters give the men on request a few yards of cloth to enable them to do 
work on their own account, but this is only seldom done. 

There are no deliveries of domestic supplies. 

I have the honor to be, sir, your obedient servant, 

E. A. Claaszen, 
American Consular Agent. 

Danzig, March 2^ 1912. 


Report on the Landwirtschaptliche Magazin-Genossenschaft of Koenigsberg. 

American Consular Agency, 
Koenigsberg, Prussia, Germany, March 8, 1912. 

To the American consul, Stettin. 

Sir: I have the honor to acknowledge the receipt of your request of February 25 for 
a report on the Landwirtschaftliche Magazin-Genossenschaft here and beg to submit 
the following reply: 

The Landwirtschaftliche Magazin-Genossenschaft was established here 40 years ago 
and was then chiefly occupied with dairy produce, but gave up this business about 9 
years ago owing to too great competition. 

The Landwirtschaftliche Magazin-Genossenschaft numbers now 32 members and is 
so organized that the members of the Genossenschaft send in their grain, seed, and 
wool, which is sold at a commission at the exchange. In return the company acts on 
behalf of its members in the purchase of seed, manure, and agricultural machinery, 
also at a commission. 

The Landwirtschaftliche Magazin-Genossenschaft has so dwindled that the inde¬ 
pendent wholesale and retail dealers give no attention to the company. 

I have the honor to be, sir, your obedient servant, 

Alexander Eckhardt, 
American Consular Agent. 




COOPERATION AND COST OF LIVING. 


97 


Report of Consular Agent W. Potenberg. 

Schuhmacher Rohstoffverein Swinmunde: 

American Consular Service, 

Swinemunde, March 7, 1912. 

The society is established with 13 members in 1902 on the base of the German law 
of May 1, 1889. Each member has to acquire a share of M. 300, the shares figuring 
the working capital. The purpose of the society is to furnish the members (boot¬ 
makers) with articles used in their industry, possibly direct from the producers 
under prices of intermediate trade. 

The manager (storekeeper), salaried by the society, prepares the purchase, which is 
done by the president of the society, but the manager sells the articles to the members 
by himself at the market price. 

The return is grown year by year. 

The net profit has been distributed as follows: Ten per cent to the reserve funds, 
4 per cent to the members on the shares, 5 per cent to the manager, and the remainder 
to the members proportionate, to the highness of the amounts at which each member 
bought articles from the society. 

The members have received, 1902 to 1908, inclusive, 10 per cent per year; 1909 to 
1910, inclusive, 8 per cent per year. Number of members, 39 on January 1, 1912. 
All two years the society has to be inspected by Government’s inspector. 


SORATJ. 

Dwellings for Workingmen’s Families in Sorau, Germany. 

American Consular Agency, 

Sorau, Germany, February 26, 1912. 

In the year 1893 a company known as the “Sorauer Arbeiterheim, e. G. m. b. H.” 
(Sorau Worker’s Home, registered company with limited securities) was founded in 
this city. The purpose of the organization, which is purely private, is to provide 
workingmen’s families with comfortable and sanitary dwellings with garden attached 
at reasonable rates so that the laboring classes may avoid living in the antiquated, 
overcrowded, and unhealthy tenements so prevalent throughout this vicinity. 

A small amount of the company’s shares have been subscribed for by local merchants, 
but by far the greater portion of them is in the hands of factory owners who support 
the institution because it offers an attractive inducement to factory hands to remain 
here where their labor is in demand instead of constantly moving about from city to 
city. The annual dividend paid by the company upon the capital investment is 
generally 3 per cent. 

The company owns a number of modern two-story brick dwelling houses located in 
various parts of the city. These buildings are subdivided into three separate dwell¬ 
ings, each containing three to four rooms and kitchen. A spacious garden adjoins 
each of the company’s buildings and is partitioned off so that each of the various 
families occupying the house may have access to a definite portion of the garden. 

For some years past a steadily increasing number of inquiries have been received 
from workingmen’s families for small separate houses. In order to meet this demand 
a tract of land lying in the outskirts of the city has been acquired and allotted into 
sections of 1,600*square meters each. Small cottages of three to four rooms suitable 
for single families are being built and will be ready for occupancy during the course 
of the present year. 

H. Doc. 833, 62-2-7 



REPORTS ON COOPERATION AND THE COST OF LIVING FROM 
CONSULAR OFFICERS IN CANADA, FRANCE, NORWAY, AND 
OTHER COUNTRIES. 


GUAYAQUIL, ECUADOR. 

Cooperation and the Cost op Living in Ecuador. 

I have the honer, referring to the department’s special instruction No. 66, of October 
12, 1911 (file No. 165,060), relative to cooperation and the cost of living in Ecuador, 
to state that cooperative societies do not exist in Ecuador, and that there is no organized 
movement either for the production and marketing of agricultural products, or for the 
distribution of the common necessities of life. 

In this respect the only thing that may be said is that the sugar industry of this 
country is controlled to some extent by a combination formed by the growers, with a 
view only to maintain prices at a maximum, and endeavor to avoid the possible fluc¬ 
tuation in the price of the commodity to which it would otherwise be subjected by 
the several manufacturers in the country. It can, however, hardly be said that this 
product is beyond the reach of those of the poorer classes who only receive a very 
small compensation. The last session of the Congress of Ecuador passed an act placing 
sugar on the free list. 

In the larger cities in Ecuador meat is marketed after having been inspected and 
passed by the municipal medical examiner, who receives as compensation for such 
services 10 centavos of a sucre (equal to $0.05) for each animal inspected. 

Guayaquil has a slaughterhouse in which all beasts must be butchered that are 
intended for the market, and on which a municipal tax of 1.75 sucres (equal to $0.87) 
is collected for each bull, cow, or ox so butchered, and 0.60 sucre (equal to $0.30) 
additional is collected for drayage (transportation via street railway in a car controlled 
by the municipality) from the slaughterhouse to the city market. For each hog 
butchered the amount of tax collected is 0.25 sucre (equal to $0.12^); for a sheep or 
goat the amount collected is 0.10 sucre (equal to $0.05). The meat is retailed at an 
average price of 0.30 sucre (equal to $0.15) per pound, but some of the better cuts of 
beef are sold as high as 0.40 sucre (equal to $0.20) per pound. 

In the country districts the owners of plantations always have a sufficient number 
of animals butchered to supply all those with meat who are in their employ. It may 
be said that in Ecuador meat, rice, and plantains constitute the three principal articles 
of diet. The plantain being used to a greater extent by the poorer classes. 

Agricultural products in Ecuador are raised entirely by private individuals. From 
the lowlands in the coast district and along the rivers the produce is brought to the 
towns and cities in canoes or on burros; from the altitudes of the interior vegetables 
of excellent quality are brought to the various towns along the line of the railway to 
be marketed and transported by rail to other places. These products bring prices 
in accordance with the demand, but when compared with prices obtained in the 
United States for similar products they are found to be relatively high. Among the 
laboring classes the plantain may be said to be one of the principal articles of food, 
and it is remarkable to see the excellent physical condition of some individuals who 
subsist on this article along with a few other articles of food of very little cost. 

The number of people engaged in the raising of agricultural products for domestic 
consumption is relatively small owing somewhat to a lack of knowledge as to how the 
products could best be produced, and also for the fact that the native stock seeds 
are sometimes of poor quality. With a good quality of imported seeds and proper 
irrigation, this country could improve very materially the production of many if not 
all of the agricultural products. 

I have the honor to be, sir, your obedient servant, 

Herman R. Dietrich, Consul General. 


98 



COOPERATION AND COST OF LIVING. 


99 


FERNIE, CANADA. 

Cooperation in the Cost of Living. 

Fernie, Canada, November 13, 1911. 

In compliance with special instruction circular No. 66, dated October 12, 1911, file 
No. 165060, I have the honor of submitting the following: 

There are no cooperative societies in this district—that is, from the viewpoint of 
societies formed for the purpose of handling goods and products directly from the 
producers. 

The Fernie Cooperative Society is the only concern which can be said to do busi¬ 
ness as a joint-stock company in this district, the shareholders of which are miners 
and other workingmen. 

This company does business in the usual retail way, buying its goods, consisting of 
groceries and provisions, through wholesale houses, as other concerns do, and selling 
to the public. The principal trade is derived from the miners and working classes. 
At first the venture seemed to be fraught with uncertainty, but during the past 
summer the trade of this society seems to have been growing, and the manager reports 
a very satisfactory trade. Wholesale dealers supply them with stock as liberally as 
the financial standing of the society will justify. 

This society has been handling some fruit from the Creston district, in West Koote¬ 
nai, and seems to have the exclusive handling of that product, the only one of a natural 
product of nature which comes direct from the orchard to the store. 

This being a mining district, the cooperative idea is beginning to assume some 
importance, though the above society is the only one at present in operation. Many 
of the miners of the district come from localities in England where the cooperative 
society has been in operation for some time, and it is through this influence that the 
idea is growing throughout the mining district. 

The movement is looked .upon by the regular trade circles with disfavor, and much 
is said with the object of discrediting the move as impracticable, as the tendency to 
combine as to prices is present here among trades generally, as is the case in other 
localities, but of recent years competition has done much to bring down prices from 
an abnormally high range. 

There is still room for reductions, and the cooperative movement, if properly man¬ 
aged, will have the effect of bringing the wholesale and retail prices closer together. 

I am, sir, your obedient servant, 

Frank C. Denison, 

American Consul. 


HAMILTON, CANADA. 

Report on Canadian Cooperative Fruit Associations. 

Hamilton, Canada, December 12, 1911. 

There are 36 so-called cooperative fruit associations in Ontario. These may be 
divided roughly into three classes: Apple associations, shipping mainly to distant 
markets; general fruit associations, concerned with shipping apples, pears, plums, 
cherries, berries, etc., to home and distant markets; and small-fruit associations, 
engaged mainly in shipping berries to home markets. 

Nearly all the small-fruit and some of the general fruit societies are rather loosely 
organized, but truly cooperating. The others have all organized with cooperative 
intent, but have fallen short in some instances of their ideal through lack of knowledge. 

apple-shipping societies. 

The Forest Fruit Growers’ Association is one of the best examples of a simple form 
of organization. It is truly cooperative. There is no capital stock, and the deposits 
of buyers are depended upon for working capital. It rents a shed and packs most 
of the apples in the shed. Sales are made f. o. b., and each buyer is required to pay 
into the bank a certain percentage of the price before the fruit is shipped and the 
remainder within a certain number of days. The society then pays to each member 
a certain price per barrel, reserving a little more than sufficient to pay expenses. 
At the annual meeting all remaining moneys are paid back to the growers, according 
to the business done with the society. The only person who is paid, besides neces¬ 
sary employees, is the secretary-manager, who receives a commission of 5 cents per 
barrel on the total pack. The average pack is about 7,000 barrels. There are about 
45 members, and the society is steadily growing. 



100 


COOPERATION AND COST OF LIVING. 


The Oshawa Fruit Growers’ Association is described by the manager as being a 
“double-barreled” affair. A joint-stock company, composed of the members of the 
society, owns a central packing house. All fruit is packed at this house. Revenue 
from charges for use of the pack house is used to provide a fund out of which expenses 
are paid, and also a fixed dividend of 6 per cent on the stock. The society proper 
is cooperative and does not differ essentially from the Forest association, except that 
sales are made largely by consignment. The value of the plant is about $5,000; the 
capacity of the frost-proof storage is about 8,000 barrels; the membership is 75; and 
the average pack is about 8,000 barrels of apples. 

The Norfolk Fruit Growers’ Association, with head office at Simcoe, Ontario, 
resembles in form the Oshawa Society, but the stock company owning the warehouse 
consists of only a few members of the association. How long this arrangement will 
remain satisfactory is a question. At present it is one of the most successful of the 
associations. It has a membership of 188, and an annual output of about 18,000 
barrels of apples. 

There are a number of smaller societies as well as large ones, organized either on 
the Forest Fruit Growers’ Association plan or as stock companies, having an annual 
output of from 1,000 barrels upward. In some cases these societies have been handi¬ 
capped by a lack of knowledge of the business. 

GENERAL FRUIT ASSOCIATION. 

The Burlington Fruit Growers’ Association is the oldest society in Ontario. It is 
remarkable for the simplicity of its organization, as it has no constitution or by-laws, 
no warehouse, and no capital in any form. There is only a verbal agreement among 
the members. Each grower packs his own fruit, and it is shipped under his own 
name, and on its individual merits. There is a manager who orders cars for ship¬ 
ments, directs growers when to deliver fruit, pays over to each grower the price that his 
shipment has brought, and attends to other details. For this he is paid a small com¬ 
mission. The officers of the society are a president and a board of directors. The 
continued activity of the association is good evidence of its usefulness. 

The St. Catherines Cold Storage Co. is a good example of a concern organized as a 
joint-stock company, yet working steadily in the direction of a true cooperation. 
Th s society was organized in 1896, and has a mechanical cold-storage plant valued 
at $13,000, and a working capital of $2,000. A part of the capital was secured by 
mortgage on the property. The debt has been entirely paid off by the addition of 
hew members who took stock, and by applying the dividends on the stock to this 
purpose. Working capital has also been provided. The society is now endeavoring 
to effect an equal division of shares, with each member holding $50 worth of stock. 
To do this it is transferring stock of the old members holding more than this amount 
to new members and to old members not holding so much. Thus the society will 
be conducted eventually on a one-man-one-vote basis. The company ships to all 
parts of Ontario and Quebec and to many parts of western Canada. The shipments 
consist of apples, pears, peaches, plums, cherries, grapes, and an increasing quantity 
of other fruits and vegetables. The sales amount to about $75,000 annually. The 
society handles supplies for its members and others. It handles fruit for nonmembers 
and sells supplies to them, paying over one-half as much profit per dollar as it returns 
to members. 

The supply branch is a very important part of the business of the society, as it 
handles all kinds of fruit packages, spray pumps, and other machinery, ladders, etc., 
seeds, fertilizers, and spraying chemicals. It has now become the temporary whole¬ 
saler for the federation of fruit associations. In 1908 the supplies amounted to about 
$27,000, and in 1909 to $40,000. The society charges a little less than regular market 
prices, and then rebates to members and to nonmembers buying through the asso¬ 
ciation and selling their fruit the same way, the percentage of rebate depending upon 
the amount of business done with the society. 

The Grimsby Cooperative Association is a society of seven members, who own 
nearly 500 acres of land, largely planted with fruit. The stock is evenly divided 
among the members. The management of such a society is very simple compared 
with that of the St. Catherines company. 

SMALL FRUIT ASSOCIATIONS. 

The Dunnville Fruit Growers’ Association is perhaps one of the best examples of 
the small fruit associations. There are about 35 members. Fruit is shipped to local 
markets, and each member grades his own and ships it under his name. The society 
is incorporated without share capital. Its chief activity is in buying fruit packages, 
aiding in securing good markets for fruit, and disseminating useful knowledge by 


COOPERATION AND COST OF LIVING. 


101 


arranging meetings, etc. Societies of this kind are nearly all local branches of the 
Ontario Fruit Growers’ Association, which is not a trading society, but an organiza¬ 
tion having for its object the advancement of fruit-growing interests generally. A 
number of these local units are slowly growing into cooperative societies for buying 
and selling purposes. 

MANAGEMENT AND EXPENSES OF FRUIT ASSOCIATIONS. 

All the associations have practically the same form of organization, viz, a president, 
a vice president, a secretary, who is usually manager, a treasurer, and a board of 
directors, varying in membership according to the size of the society and the territory 
covered. Expenses are met by a straight charge per package. Although directors 
usually work gratis some societies allow $1 to $1.50 and mileage for each meeting held. 
The president usually works without pay, but in some cases is allowed $20 to $70 per 
year. One association, with an output of 1,200 to 1,500 barrels per year, pays its 
manager $2 per day for superintending the packing and the loading of the cars. Four 
associations, with packs running from 2,000 to 8,000 barrels per year, pay 10 cents per 
barrel to the manager. In the case of the large associations this was not enough to 
hold a good man, and the rate this year has been raised to 15 cents per barrel, with 
the manager paying the bookkeeping expenses out of his own earnings. 

Two other associations, with packs of 3,000 and 7,000 barrels, respectively, pay at 
the rate of 5 cents per barrel. In case of the larger of these two this is only for the 
shipping and selling and does not include looking after the packing. One of the 
associations, with an output of from 20,000 to 40,000 per year, pays 20 cents per barrel 
to its manager; but he is required to pay from that all of the expenses of the inspec¬ 
tion, bookkeeping, etc., which would amount to at least $2,500 to $3,000 a year. Two 
associations with large outputs pay a straight salary of $1,000 and $1,500 per annum, 
allowing also a small percentage on all supplies sold to the members. Two of the 
smaller associations, with outputs up to 2,000 barrels, report that they have no paid 
manager, the work evidently being undertaken by the executive committee. Of 
the newer associations the majority are paying 20 cents per barrel, the manager to 
pay out of this amount all bookkeeping and other office expenses. One association 
just started has agreed to pay its manager $1,500 straight salary. 

FEDERATION OF FRUIT ASSOCIATIONS. 

As the individual societies in Ontario began to get in touch with one another, the 
need of closer relations was felt by the cooperative leaders. The fruit branches of 
the department of agriculture at Toronto and Ottawa, in their endeavors to encourage 
the fruit industry in the Province, soon found that these societies offered one of the 
best mediums for reaching the individual grower. One of their great difficulties in 
the way of advocating better quality had always been the fact that improved quality 
in many cases did not bring proportionately greater returns to the grower, because 
most buyers paid only a flat price regardless of quality. The cooperative societies, 
however, paid to each member the full amount due him, according to the quality of 
the fruit. 

In 1906 active steps were taken to unite the scattered societies into a loose form of 
federation, and 13 societies became affiliated under the name of the Cooperative 
Fruit Growers of Ontario, with head office at Toronto. An annual fee of $5 for each 
association was fixed. In the beginning the objects of the federation were to discuss 
forms of organization and means of securing a higher grade of fruit;-to keep the asso¬ 
ciations in touch with the prices being offered by buyers, and prices received in the 
home and export markets, and to secure a more uniform distribution of the crops. 
The secretary gathers from various inspectors and correspondents a report of conditions 
in the various producing sections of Canada, and during the selling season, the condi¬ 
tion of the markets, the quality of the fruit being shipped, prices offered and received, 
and other items of interest are sent to each society in a weekly report. Before the 
apple associations make sales in the fall a meeting of the federation is held, at which a 
range of prices is suggested as a basis of sales. This is adhered to as nenrly as market 
conditions will permit. 

As improved methods of production became general among the members of the asso¬ 
ciations large quantities of spray materials, machinery, etc., came into use. These 
were always high in price because they were only sold in retail quantities by a few 
local dealers. In 1908 the federation determined to arrange for the purchase of sup¬ 
plies for all societies. The savings in this way are immense, as carload lots of chemicals 
can be bought at a time of year when prices are at.their lowest and held till wanted for 
use. Each society is asked to send to the head office an estimate of the amount of 


102 


COOPEKATION AND COST OF LIVING. 


supplies required, which serves as a guide in buying. Other supplies, such as pack¬ 
ages and spray machinery, are bought in the same way, and a great saving has been 
effected. Buying cooperatively has made it almost impossible for a combine of manu¬ 
facturers to control prices, as was attempted with fruit packages a few years ago. The 
makers of baskets from whom the St. Catherine’s Society has been buying put the prices 
of baskets so high that the society determined to place their order in the United States. 
Their order was so large and the prices so favorable in the United States that they 
have since been able to make very favorable terms with Canadian concerns. 

The chief difficulty the federation has to deal with in the supply business is the lack 
of capital and the need of a warehouse. To overcome this the St. Catherine’s Society 
is acting as distributing agent for the federation. This association orders the supplies, 
holds them till wanted by other societies, and then forwards them, charging a small 
commission for the service. The federation will shortly be incorporated, a ware¬ 
house will be built, and a manager employed when finances permit. 

GRADING AND PACKING THE FRUIT. 

Packing and grading are done by the grower, or by the grower with a system of 
inspection by the society, or by the society. The first system is very loose, and the 
only satisfactory method of sale in this case is to sell each grower’s fruit on its individual 
merits. The objection to the second method is the lack of uniformity in the pack. 
The third system is the one usually followed by apple and citrus fruit societies. Two 
methods of packing by the society are followed. In one case the fruit is brought to a 
packing house to be packed and graded by packers employed by the society. This 
method allows a very uniform pack, as the manager can keep a direct watch on the 
operations throughout. It also allows of the fruit being kept under good conditions 
until time of shipment. 

The other method is to have the fruit packed and graded in the orchard by packers 
employed by the society. In some instances society picks, grades, and packs, while 
in other cases only the two latter operations are performed by the society. One 
society employs a number of packing gangs, and has inspectors who travel from gang 
to gang to insure uniformity in the pack. This system relieves the grower of the work 
of handling the fruit at a season of the year when he is very busy. It is significant 
that some of the societies employing the packing-house system are beginning to pack 
a part of the fruit in the orchard. 

DETERMINING THE PRICES TO BE PAID THE GROWERS. 

In Ontario there are three methods of determining what prices the growers are enti¬ 
tled to, viz: Pooling all returns, pooling returns for certain varieties and fruits, and 
prorating prices for each variety and grade. The first, method was in the past the 
common one employed by societies in Ontario, but is open to the objection that it 
does not discriminate between poor and good varieties, and is thus inclined to encour¬ 
age the production of poor varieties. The second method is becoming popular. The 
varieties of fruit of a certain kind are divided into classes, those varieties of nearly 
equal quality being placed in the same class. The price is then pooled on each grade 
of each class. This does not favor the production of poor varieties, but rather 
encourages the grower of poor varieties to grow a more valuable article. The third 
method is the one that gives absolute justice to the grower, but it entails an elaborate 
system of bookkeeping. In this method each grade and each variety is kept separate 
on account of the price and is pooled on each variety and grade. Pooling is necessary, 
as one shipment may not sell as well as another, the fault being neither that of the 
grower nor the society. By following this method each member gets the exact returns 
that each variety has sold for on the markets. Some of the general and small fruit 
societies pool each day’s shipments, while others pool weekly shipments. 

James M. Shepard, Consul. 


SYDNEY, NOVA SCOTIA. 

Cooperation and the Cost of Living. 

Sydney, Nova Scotia, March 2, 1912. 

Of the cooperative associations in Cape Breton the Sydney Mines Provident Society 
(Ltd.) of Sydney Mines, was started in 1873, the knowledge of the workings of coopera¬ 
tion having been brought to Cape Breton by miners from England. 

The Sydney Mines Association did a profitable business for many years, but the 
neglect to make provision out of their profits for a reserve fund, the withdrawal of 
capital from their business, the changing conditions to which they did not adapt 
themselves, and the burning of their stock and store brought about their failure in 1905. 



COOPERATION AND COST OF LIVING. 


103 


In 1873 the Britannic Cooperative Society at Sydney Mines was started in opposi¬ 
tion to the above-named association, but from lack of patronage failed in about three 
years. The International Cooperative Store at Bridgeport, Cape Breton, was organ¬ 
ized in 1885, but having no reserve fund, the removal of members, who drew out their 
investments, and changing conditions at the colleries forced a dissolution in 1898. 

The Reserve Cooperative Store Co. (Ltd.), at Reserve Mines, Cape Breton, was 
started in 1887, and failed in 1898, the same reasons—no reserve fund, lack of work, 
and withdrawal of members—being the cause of failure. 

The Morien Mutual was started at Port Morien in 1888; reckless credit and the dis¬ 
appearance of the manager caused the business to fall into the hands of the sheriff in 
1895. 

The Little Glace Bay Cooperative Store Co. was started in 1887; lack of management 
and mutual confidence, no reserve, and othei causes brought it to a close in 1894. 

The Old Bridgeport Cooperative Store Co. started in 1895, burned out a few months 
later, and was never reorganized. 

Out of these failures, and projected by men connected with one or another of the 
above, there is now in existence in Cape Breton the British-Canadian Cooperative 
Society (Ltd.), at Sydney Mines, organized in 1906; to-day it has 324 members. Its 
sales for the six months ended September 1, 1911, amounted to $55,976, with a net 
profit of $4,436. This society has a capital of $15,000. Total sales since organization, 
$312,944. 

The Glace Bay Cooperative Society (Ltd.) organized in 1906. Their reserve fund 
is made up of all admission fees and 10 per cent of profits. Its sales for the last year 
amounted to about $250,000. 

The capital is about $25,000. 

The Workmen’s Store Co. (Ltd.), at Dominion, Cape Breton, was organized in 1902, 
and the brief history of that society, which follows, will cover the other points desired 
in the report on cooperation and the cost of living. 

For upward of 20 years, ago, six stores conducted on the cooperative principle (so 
far as that principle was understood by the workmen at that time) existed in the 
mining towns of Cape Breton. Ten years ago all these stores, for reasons that can be 
easily explained, passed out of existence, leaving nothing but an odious reputation 
for cooperation. 

Many workmen, however, had been benefited by them while in operation. Among 
these a desire remained for a revival of the system. In December, 1902, a few of the 
men employed at Dominion No. 1 colliery gave practical expression to that desire 
by calling a meeting for the purpose of restarting the movement. Nineteen were 
present at that meeting. They resolved themselves into the Workmen’s Store Co, 
(Ltd.), to do business on a mutual cooperative basis. The present manager, Mr. A. 
McMullan, was there and then engaged to conduct the business. 

On March 17,1903, the capital raised amounted to $1,900. The business was opened 
with a small stock of groceries. On March 19, 1903, the colliery on which the mem¬ 
bers of the company depended for their work took fire and was out of commission for 
one year. This retarded progress for the first year. 

The company is incorporated by special act of the provincial legislature. The 
liability of the members is limited. Any workman can become a member by paying 
an admission fee of $1 and taking one share ($5) in the capital stock of the company. 
No member is allowed to hold more than 60 shares ($300). The profit of the business 
is ascertained twice a year. Ten per cent of the profit is added to a reserve fund and 
6 per cent per annum is paid on the capital to the credit of the members. The balance 
is divided as dividends over the amount of payments for goods purchased by the 
members for the half year. The following will illustrate: 


Name. 

Capital 
begin¬ 
ning of 
term. 

Interest 
for 6 
months. 

Pay¬ 
ments for 
goods. 

Rate 
of divi¬ 
dend. 

Divi¬ 

dend. 

Total. 

Paid cash 
September, 
1911. 

Adam, J. 

$300.00 

$9.00 

$270.00 

Per Ct . 
10 

$27.00 

$570.00 

$36.00 

Caldwell, J. 

300.00 

9.00 

410.00 

10 

41.00 

710.00 

50.00 

McMahon, J. 

25.00 

.75 

430.00 

10 

43.00 

455.00 

43.75 



Members are allowed credit to the amount of four-fifths of their capital. If they 
hold a less amount than $25, the interest and dividend are credited to their capital 
account until that amount is reached. They may withdraw any amount over $25, or 
if they are leaving for other parts they may withdraw altogether. 


















104 


COOPERATION AND COST OF LIVING. 


Goods are bought from the wholesalers and jobbers as the other traders do. Some of 
the stores are affiliated with the English cooperative wholesale, and import certain 
lines of their own make. 

A movement has been organized for establishing a wholesale cooperative for Canada. 
In England and Scotland, as well as in all the continental countries where the dis¬ 
tribution societies are on the ascendency, they have their owm cooperative whole¬ 
salers. The distribution stores bear the same relation to the wholesale as the individual 
members do to the local stores. The profits are always divided on the amount pur¬ 
chased. 

The movement has taken strong hold, as the following will illustrate: 


Association. 

Com¬ 

menced 

busi¬ 

ness. 

Number 

of 

branches. 

f 

Number 

of 

members. 

Yearly 

business. 

Where 

situated. 

The Workmen’s Store Co. (Ltd.). 

1903 

1 

410 

$128,000 
252,000 
112,000 
60,000 | 
25.000 

1 Dominion. 

Glace Bay Cooperative Society (Ltd.). 

1906 

3 

700 

Glace Bay. 
Sidney Mines 
Inverness. 

British-Canadian Cooperative Society. 

1906 

1 

350 

Inverness Cooperative Society (Ltd.). 

1906 

2 

220 

Dominion Italian Cooperative Society. 

1906 

2 

110 

Dominion. 


1 


Below will be found a part of the last report showing progress of the Workmen’s 
Store Co. for eight and one-half years: 

Business record (division of profits). 



Sales by 
year. 

Profit. 

Reserve. 

Interest. 

Dividend. 

Rate of 
dividend. 

1. 

$17,519.08 

$1,820.18 

$182.11 

$139.32 

$1,333.41 

Per cent. 

10 

2. 

38,049.93 

3,693. 70 

366.37 

301.04 

2,947.47 

10 

3. 

43,086.80 

4,611.59 

461.15 

371.23 

3,777.84 

i 9 

4. 

40,951.42 

5,916.01 

591.60 

512.15 

4,739.10 

10 

5. 

58,541.58 

5, 712.02 

571.49 

543.48 

4,563.19 

8i 

6. 

62,713.01 

7,244. 88 

724.48 

598.27 

5,619.04 

10 

7. 

72,768. 64 

8,284. 01 

828.34 

791.56 

6,480. 45 

10 

8. 

92,003.17 

11,367.99 

1,136.76 

815.68 

8,973. 29 

10£ 

6 months. 

57,313. 72 

7,125.07 

712.50 

614.69 

5,650.37 

10 


491,837.40 

55,775. 45 

5,580. 42 

4,787.42 

44,0,84.19 



i Average. 


In eight and one-half years the members paid into the business in cash 

on capital account. 

The business saved for them in— 

Interest on capital, at 6 per cent per annum. 

In dividend on payments. 

Reserve fund.. 


$17, 918. 83 

4, 787. 42 
44,084. 19 

5, 580. 42 


Total savings. 54,452. 01 

Paid back to members. 36, 994. 36 

Now at credit of members, including profits of last term. 29, 655. 43 


Charles M. Freeman, American Consul. 


The Cooperative Union of Canada. 

'[All communications should b3 addressBd to the honorary general secretary at Brantford, Ontario.] 


SOCIETIES IN AFFILIATION. 

Ontario .—The Guelph Cooperative Association (Ltd.), Guelph; The Preston Co¬ 
operative Association (Ltd.), Preston; the Brantford Cooperative Association (Ltd.), 
Brantford; the Ideal Cooperative Association, of St. Thomas (Ltd.); the Civil Service 
Cooperative Supply Association, Ottawa. 

Quebec. —L’Avenir de Magog, Soci6t6 Cooperative, Magog; the Industrial Co¬ 
operative Society of Valleyfield (Ltd.), Valleyfield. 
















































COOPERATION AND COST OF LIVING. 


105 


Nova Scotia. The British-Canadian Cooperative Society (Ltd.), Sydney Mines; 
the Workmen’s Store. Co. (Ltd.), Dominion: the Inverness Cooperative Societv 
(Ltd.), Inverness; the Glace Bay Cooperative Society (Ltd.). Glace Bay. 

Lntisn Columbia .—The New Westminster Cooperative Association (Ltd.), New 
W estm inster. 

Saskatchewan .—The Saskatchewan Purchasing Co. (Ltd.), Broadview. 

OBJECTS OF THE UNION. 

1 he recognition, by affiliation with the union, of all bona fide cooperative associa¬ 
tions in the Dominion of Canada, in order that the public may be able to distinguish 
the same from institutions which are now or may hereafter be organized with a co¬ 
operative title for purposes of personal or private advantage or profit. (2) The propa¬ 
gation in the Dominion of cooperative principles, to the end that the practice of truth¬ 
fulness, justice, and economy may be secured by the abolition of false dealing, either 
(a) direct by representing any article produced or sold to be other than what it is 
known to the producer or vendor to be; or (6) indirect, by concealing from the pur¬ 
chaser any fact known to the vendor material to be known by the purchaser to enable 
him to judge of the value of the article purchased. (3) Conciliating the conflicting 
Interests of the capitalist, the worker, and the purchaser, through the equitable division 
among them of the fund commonly known as profit. (4) Preventing the waste of 
labor now caused by unregulated competition. (5) Cultivating a spirit of mutual 
service by self-abnegation expressed in the cooperative motto, “Each for all, and all 
for each, ’ and to promote, by the same means, moral, educative, and refining enter¬ 
prises designed for the improvement of the people generally. 


ALGERIA. 

Cooperation and the Cost of Living in Algeria. 

Algiers, April 12 , 1912. 

There are 115 agricultural societies (syndicats agricoles) in Algeria, with' 9,000 
members, which have been founded since the passage of a law on March 21, 1884, 
permitting their creation and defining their functions. These societies, which are 
founded for the study and protection of the professional interests of their members, are 
sometimes subsidized by the Government or enabled to borrow money under specially 
advantageous conditions. Their primary object is to promote rational agriculture, 
to organize methods for resisting pests, such as phvloxera, and to promote cooperative 
enterprises. Some of these societies have undertaken such cooperati\e work as the 
construction of vaults for the storage and vinification of wine, the prevention of the 
adulteration of wine, or the use of agricultural machinery in common. 

A considerable number of agricultural societies have purchased fertilizers, seeds, or 
animals for breeding purposes. Two unions of agricultural societies have been 
founded, one at Algiers and one at Constantine, but these unions simply furnish 
information or facilitate the transactions of the societies, and each society is an inde¬ 
pendent entity. Such economies as have been realized by the purchases of the 
different societies vary according to the amounts purchased and other factors. Most of 
the purchases made by agricultural societies have been of fertilizers, and it is claimed 
that the quality of the product has been more uniformly good than when purchases 
were made by individual agriculturists; that the members of the societies have been 
enabled to obtain fertilizers at lower prices than if they purchased from dealers; and 
that there has been a marked decline in the prices at which fertilizers are sold in 
Algeria, owing to the action of the agricultural societies. L’Union des Syndicats 
Agricoles de Oonstantine purchased some 50 reaping machines five years ago at two- 
thirds the price for which such machines are generally sold in Algeria, but there have 
been no further purchases of agricultural machines by the agricultural societies. 
Owing to different requirements and inclinations of agriculturists and the selling 
organization and active competition of dealers, the purchase of agricultural machines 
is a difficult enterprise for the comparatively small agricultural societies that exist 
in Algeria. 

The Union of Algiers purchased 860,000 worth of supplies in 1910, the Society of 
Marengo 828,000, the Society of Sidi-Bel-Abas 8100.000. the Society of Bougie 
826,000. While the amount of purchases of all the agricultural societies can not be 
obtained, it is estimated that their annual purchases amount to at least five or six 
hundred thousand dollars. 

Only two agricultural societies attempt to market the products of their members 
and one of these societies, which owns a vault for the production of wine, is in a pre- 



106 


COOPERATION AND COST OF LIVING. 


carious financial situation; the second society sells early 'vegetables, grown by its 
members, on the Paris market. 

The only cooperative society that has been founded in Algeria for the purchase of 
supplies for agriculturists and the sale of agricultural products, “La Cooperative 
Agricole d’Algerie,” was founded in 1897 and was dissolved in 1907. It was founded 
before the agricultural societies had developed sufficiently to insure an adequate 
amount of business. It had a capital of $40,000 and profits were to be divided between 
the capital of the corporation and purchasers. It was badly managed and its share¬ 
holders only received a 50-per cent dividend when it was dissolved. 

The only cooperative store in Algeria is the “Society Cooperative de Consomation 
des Employes des Chemins de Fer Alg6riens” at Algiers, which has been in existence 
17 years. Only railway employees can become members, and members are not 
permitted to purchase for anyone but themselves and their immediate family. It 
is stipulated in the statutes of the society that its minimum capital shall be $600 
and its maximum capital $3,000, but its maximum capital can be increased if the 
increase is voted by the members. In order to become a member it is necessary to 
purchase a share of the society costing $10. These shares pay 4 per cent interest, 
and many of the members have purchased a number of them. At the close of the 
year 1911, 2.75 per cent of the amount expended at the store was returned to members 
who purchased over $20 worth of supplies at the store, and 25 per cent of the profits 
made during the year were applied to the reserve fund. The society has only 330 
members and it is not able to purchase wholesale in larger quantities, at more favorable 
rates, or under different conditions than commercial stores. 

Cooperative enterprises in France have been imitated in Algeria, but they are less 
important. The Mahometan population takes little interest in the cooperative 
movement, and the population of European origin, which is less than 1,000,000 and 
is scattered over a large and mountainous country, is less stable and homogeneous 
than the population of France and is more inclined to depend on individual efforts 
than on collective enterprises. 

While the purchases of certain agricultural societies have in some instances effected 
economies for their members and have tended to reduce the retail market price in 
Algeria for agricultural supplies and in particular of fertilizers, it does not appear 
that the cost of living has been radically decreased by their efforts. It is likely, 
however, that the scope and importance of societies for cooperative purposes will 
continue to increase and that more important results will be obtained in the future. 

Dean B. Mason, Consul. 


BERMUDA. 

Cooperation and the Cost of Living. 

American Consulate, 
Hamilton , Bermuda , November 15, 1911. 

The Assistant Secretary of State, 

Washington, D. C. 

Sir: I have the honor to submit the following report in reply to No. 66 special 
instruction, file No. 165060, dated October 12, 1911. 

Cooperation in selling goods does not appear of sufficient value in Bermuda to have 
become popular. With the one exception at the Naval Station at Ireland Island such 
societies have not prospered, nor has their existence seemed to have lowered the 
average cost of living. This is not a fair field for such experiments, there is not room 
enough, nor population, nor diversity of occupation. Labor is largely agricultural, 
and for years the neighboring country store with an assorted class of goods has sold 
these families their supplies; in frequent cases, if not always, extending credit on 
growing crops, making any change of system difficult, if not impossible, for the very 
want of actual money at its very inception and continuance. The few cooperative 
societies existing—namely, the Somerset and the Sandy’s Cooperative Societies 
and the Hamilton Dry Goods Association—are none of them in a very flourishing 
condition. None of the associations sell at lower prices than the regular dealers, 
although that was their original aim, and therefore the general cost of living has not 
been reduced to any appreciable extent by them. 

At the naval station at Ireland Island a cooperative society was established some 
years since by the navy, for all naval men and their families, the privilege being 
extended to the army and the residents at Ireland Island. The society is very strong 
and of great benefit to its membership, and has reduced the cost of living appreciably 
to its clientele. Its relations to the dealers of the colony are amicable; evidently 



COOPERATION AND COST OF LIVING. 107 


there appears to he little friction, possibly because the navy are all too powerful to 
be injured, and that the other societies are in a poor financial condition. 

Purchases of certain classes of vegetables, of poultry and milk can be made from 
local producers. All other goods are imported from other countries, and may be 
bought in Bermuda from the larger dealers as convenience or necessity may suggest. 

The army has canteens and grocery bars, but no “army and navy stores ” so called. 

I have the honor to be, sir, 

Your obedient servant, W. Maxwell Geene, American Consul. 


HONGKONG. 

[Prepared in response to department’s circular instructions No. 66, File No. 165060, of October 12, 1911.] 
Cooperative Societies in Hongkong. 

Hongkong, December 19, 1911. 

The cooperative society for the purchase and distribution of grocery and other 
household supplies common in Great Britain has a part in the business of Hongkong. 
The cooperative principle here is represented by a single concern with small capital 
and with no very extensive business but its influence upon the economic affairs of the 
community is large. The institution was organized several years ago by members of 
various civil and military services in Hongkong who were acquainted with the merits 
of such concerns in Great Britain with a view of handling goods from Great Britain, 
Europe, and the United States wanted by such members. The institution has grown 
considerably and net only sells goods to members but to the public as well, the differ¬ 
ence being that members receive dividends at the end of stated periods upon their 
purchases whereas the public does not. Prices in the cooperative store are low and 
represent actual original cost plus a percentage representing the cost of running the 
establishment. The institution is not organized for profit but what profits are made 
incidental to the business are distributed in dividends or refunds upon purchases 
made by members of the society. 

The situation among purveyors in Hongkong is rather peculiar. There are two 
grades of shops in Hongkong, of which the first includes a comparatively small number 
of establishments operated by European firms or other foreigners and catering to the 
high-class trade only. The second clqgs includes the great number of “compradore” 
establishments of Chinese dealers who handle all sorts of goods—foreign and Chinese— 
green vegetables, canned goods, meats, bottled goods—in short practically everything 
needed in households. This latter class attempts to cater to trade of all classes but 
reaches the mass of people generally. Both as a condition of Chinese trade generally 
in the way of low rents, cheap labor, a lack of operating expenses usual in such estab¬ 
lishments in America or Europe and by reason of keen competition these concerns 
sell goods at low prices, all things considered—as low prices, nearly, as at the coopera¬ 
tive establishment. They prevent the spread of the cooperative principle in Hong¬ 
kong but on the other hand the operation of the cooperative concern unquestionably 
holds down local prices to a minimum. 

Most of the foreign goods handled both by the cooperative society here and by 
compradores are imported by import commission houses and handled to either sort of 
establishment upon a very narrow margin of profit. Apparently there is no disposition 
to discriminate against either in any way. Some goods are imported by each class of 
concern direct but in this apparently neither has an advantage. The operation of the 
cooperative society here has been a success in itself but its chief benefit to the com¬ 
munity has been in its influence upon prices charged by other distributors. 

George E. Anderson, Consul General. 


MALTA. 

Cooperation and the Cost of Living. 

Malta, December 6, 1911. 

The Secretary of State, Washington. 

Sir: I have the honor to report in reply to special instruction circular No. 66 (file 
No. 165060) that there is only one cooperative institution in the Maltese Islands. It 
is a branch of the Junior Army and Nav\ Stores, which has its headquarters in Lon¬ 
don. This should not be confused with the Army and Navy Stores, a quite distinct 
concern also with offices in London. It has no appreciable affect in lowering prices 
to the general public, which buys there as well as do the members. As the stores 
here are only a branch of the main house in London, the policy of the association is 




108 


COOPERATION AND COST OF LIVING. 


decided there and the manager here simply receives his goods and his orders. There 
does not seem to be any prejudice against the “J. A. N.,” as it is known here. It lias 
a reputation for selling good goods. 

About 20 years ago a cooperative general store was started by civil-service em¬ 
ployees in Malta. It lasted about five years and wound up its business owing to 
mismanagement. Too few members took an interest in seeing that it was managed 
properly and too much was left to too few people. 

There was a system by which stockholders received “tokens” with each purchase, 
and at the presentation of the bill at the end of the month produced the tokens and 
were allowed a percentage off the amount. My informant (a former vice consul of 
the United States in Malta) states that the failure was not primarily because the 
institution was cooperative but because of bad management. There was no prejudice 
against it and people went there to trade. I have the honor to be, sir. 

Your obedient servant, 

James Oliver Laing, Consul. 


NICE, FRANCE. 

Report upon Cooperation and the Cost of Living in the Consular District 

of Nice, France. 

The cooperative societies in this consular district have not been able to develop 
their aims to any great extent in the Maritime Alps for the following reasons: 

The most important is that the working population here is not sedentary, and changes 
considerably from one year to another. 

There is only one manufacturing center in this district, which is also detrimental 
to the cooperative movement, and the working population in general prefers buying 
on credit, a system which is impossible to carry out with the cooperative societies. 

The cooperative societies limit the line of goods handled by them to grocery arti¬ 
cles, and find it against their interests to. sell perishable food. 

- There are two kinds of cooperative societies in this district, the first being called 
“open cooperative societies,” from which the public can buy, but can not share in 
the reduction offered to the shareholders, who are provided with tickets of member¬ 
ship. The others, known simply as “cooperative societies,” sell only to their 
members. 

Of the first kind there exists but one, “La Soci6t6 Cooperative de Menton ”; of the 
second the most important is “La Cooperative du P. L. M.,” or a cooperative society 
for the employees of the Paris. Lyons & Mediterranean Railway Co., which society 
has its head office in Paris, and there are comparatively few members of it in this 
district. 

The cooperative society next in importance in this class, and the only other at Nice, 
is “La Society Cooperative des Employes du Gaz,” a society too recently founded for 
me to be able to state if it can overcome the difficulties connected with the running of 
such associations here. 

All other cooperative societies which have been founded at Nice have failed, and in 
most cases they have been dissolved for want of membership. 

There is a cooperative society called “L’Epargne” at Grasse, and another at the 
village of Vallauris, a small center for the earthenware industry in this district. The 
first operates as a limited company, its shareholders receiving a dividend on their 
subscribed capital, and a percentage deducted at the end of each quarter on the prices 
of the articles bought by them in the stores. I learn that this company is prosperous, 
and was able to pay a dividend of 5£ per cent last year. Its influence on the cost of 
living is small, as it is practically in competition with the open trade, and only benefits 
its shareholders. It has no doubt a certain influence in preventing a collusion of the 
grocery stores to exaggerate the prices of foodstuff. Mentone being a city of only 
15,000 inhabitants, this influence is naturally only local. 

“La Society Cooperative des Employes du Gaz de Nice,” “L’Epargne de Grasse,” 
and “La Liberalis de Vallauris,” the only other cooperative societies in this consular 
district are only open to their members for making purchases, and these societies were 
formed under the law of July 24, 1867, and modified on August 1,1893. Each member 
is obliged to buy a share in the respective society, the shares being of 50 francs, equal 
to $9.65 each in value. The number of members is not limited, but in the first-named 
society, they have to be employees of the “Societe di Gaz de Nice.” The shares are 
issued in the name of a member and can be paid for in monthly installments of 10 francs, 
equal to $1.93 the first month, and a minimum of 3 francs, equal to $0.58 monthly 
thereafter, but the whole payment must be made within a year. The shares can not 



COOPERATION AND COST OF LIVING. 


109 


be sold and can only be transferred with the consent of the board of administration, 
these societies refund to their members 2 per cent at the end of each month on the 
total aniount of their purchases. At the end of the year, 10 per cent is deducted from 
the gains for a reserve fund, and when this fund has reached the half of the invested 
capital, the 10 per cent is used for increasing the stock on hand and developing the 
interests of the society, and the remainder of the gains is divided among the stock- 
holders. These societies are comparatively small, “L’Epargne” having 150 members 
and La Liberalis ” less than 100 members. 

The above-stated facts show that the cooperative movement can have very little 
influence in this region in affecting the cost of living in general, and that the members 
have only had a small reduction on the articles bought by them, and that the incon¬ 
venience of having to pay cash and go a longer distance to the store counterbalances 
the advantages of the slight cheapness in the cost of the articles. 

The attitude of the wholesale trade to the cooperative societies is unfriendly, and 
many of the wholesale stores of the district refuse to sell to them, but this is of little 
consequence, as the cooperative societies procure the articles for their business at 
Marseilles. 

The cooperative societies here are financially not strong enough to purchase directly 
from the producers, but buy their articles from independent wholesale dealers who do 
not cater to business in this district. 

There are no cooperative societies or semiprivate cooperative companies here which 
deal with other articles than groceries. 

Respectfully submitted. 

William Dulany Hunter, Consul. 


No. 1. 


ST. MICHAELS, AZORES. 

Cooperation and the Cost of Living. 


St. Michaels, Azores, January 8 , 1912. 

The Secretary of State, 

Washington. 

Sir: I have the honor to acknowledge the receipt of the department’s circular 
instruction No. 66 (file No. 165060), dated October 12, 1911, requesting information 
in regard to cooperation and the cost of living in this district and in compliance whereof 
I beg to report what I have personally learned on the subject from some prominent 
business men of this city. 

The cooperative system was given a trial about 30 years ago without satisfactory 
results, and the most apparent reason for the short duration of its existence seems to 
have been the lack of patronage from the public. 

On account of poor administration and indifference of the public the cooperative 
associations proved to be failures and to-day there is not one association of the kind in 
the Azores. 

No hostile attitude seems to have existed between the associations and the retail 
dealers, so far as it may be ascertained. 

In regard to the cost of living, it is admitted by all that it has been increasing gradu¬ 
ally from year to year on more or less the same average of the other countries. It 
seems to be, then, a problem of almost universal quotation. One of the local reasons 
for this state of things is attributed to emigration. The lack of hands has pushed the 
labor high and as a consequence the products of labor must be high; but a closer obser¬ 
vation may trace it also, in a certain degree, to some speculation conducted by most 
of the dealers in the necessaries of life. 

Another reason given for the high cost of living, particularly in this city of Ponta 
Delgada, is navigation, which in late years has increased —that is, in the matter of large 
steamers calling—and when these vessels call and provision a new life is instilled in 
the market and after their departure there is a marked increase in the price of almost 
all necessaries of life, particularly eggs and poultry; and it takes some time for those 
prices to adjust themselves to normal conditions. This was quite keenly felt after a 
recent visit of four British naval vessels, during which prices more than doubled on 
all kinds of fresh provisions. 

I have the honor to be, sir, 

Your obedient servant, E. A. Creevey, American Consul. 



110 


COOPERATION AND COST OF LIVING. 


STAVANGER, NORWAY. 

[Inclosure No. 1 in dispatch dated Feb. 3,1912.] 

Report on Cooperative Stores in Stavanger, Norway. 

Stavanger, Norway, February 8, 1912. 

The rapid increase in the jcost of living in the last few years in this district has given 
a great impetus to cooperative societies. While the chief development of the cooper¬ 
ative system has been in the sale of general merchandise, yet the cooperative plan is 
being tried in a number of other wajs. 

The farmers’ associations (Landhusholdningsselskaper), instituted and supported by 
means of Government loans without interest, for the purchase of seed, feed, and fertil¬ 
izers, is one of these. The local associations in the rural districts (Eggsamlag) for the 
wholesale marketing of eggs, eliminating the local merchants, commission men, and 
middle men, is another. Still another phase of the cooperative system in vogue is 
found in the temporary association (Faellesindkj0pslag) of all municipal employees 
for the purchase by wholesale of certain household necessaries, such as groceries, 
butter, eggs, etc. 

OPPOSITION TO THE COOPERATIVE SOCIETIES. 

All these cooperative movements have the united support of the socialists, who are 
now very strong in numbers in this district, and they meet with very strong opposition 
from the retail merchants and to a large extent "from the commercial interests in 
general. This opposition seems to have been better organized and to have been more 
effective in its results in the other parts of the Kingdom than in this district. This is 
especially true of the cooperative stores. These are now stronger and more firmly 
established in this district than anywhere else in Norway, and their growth indicates 
that they are here to stay and are not likely to be driven out by the opposition of the 
merchants and business men opposing them. 

One of the most effective means used by the retail dealers to combat the cooperative 
system has been the attempt to secure a general boycott of the cooperative stores on 
the part of the wholesale dealers by inducing or compelling the wholesalers to decline 
to sell any goods to the cooperative stores, under penalty of losing all the trade of the 
regular retail merchants. This boycott has been effected by the retail merchants’ 
associations in a few instances, such, for instance, as the Standard Oil Co., which will 
sell no oil to the cooperative stores. 

Another of the means employed by the merchants’ associations of the Kingdom to 
retard the growth of the cooperative stores is the change secured last year in the tax 
laws. Until 1911 the cooperative stores were exempt from payment of the heavy occu¬ 
pation and income tax imposed upon other merchants, firms, and individuals. By a 
law enacted in 1911, however, the cooperative stores must now pay taxes in full on their 
income derived from all sales to nonmembers of the cooperative society, and one-half 
the regular tax rate on the income derived from all sales to members. 

Notwithstanding the opposition of the merchants and commercial men generally, the 
cooperative stores of this district are apparently more firmly established than at any 
time since they were established, and are meeting with more extended support and 
popular favor than at any time in the past. 

COOPERATIVE STORES IN THE DISTRICT. 

There are 20 cooperative stores in this consular district, of which number 4 are located 
in this city and 16 are located outside the city in the rural parts of the district. The 
cooperative stores in Stavanger have several branch stores in the city, one of them 
having five small branches. 

The annual sales of the 16 stores in the rural parts of the district aggregate about 
$536,000. The annual sales of the 4 stores in this city aggregate about $402,000. 
The largest of the 4 cooperative stores in the city had aggregate sales in 1911 amount¬ 
ing to about $160,800. This store employs 40 men and women, mostly women. It' 
has nearly 1,200 families as customers. 

These stores handle all classes of goods found in general dry goods, grocery, and 
notion stores, and, in addition, many articles usually found only in house-furnishing 
stores. They also handle clothing and shoes. 

COOPERATIVE PLAN FOLLOWED. 

The plan in operation in these stores follows the Rochdale system, with a few varia¬ 
tions from it. Goods are not sold any cheaper than at other stores, but the profits of 
the business are paid out twice a year to the members in the form of cash rebates on 


COOPERATION AND COST OF LIVING. 


Ill 


their purchases. The cooperative stores are not incorporated, nor are they created nor 
operated under the provisions of any law. They are recognized in the laws only by 
partial exemption from taxation. They are merely voluntary associations formed for 
the purpose of eliminating the retailer’s and middleman’s profit in the sale of house¬ 
hold and family necessaries. While their members are largely drawn from the Socialist 
Party and the working classes, those stores which sell to others than members are 
patronized quite largely by all classes; and both these and the stores selling only to 
members of the society handle only goods of standard grade and good quality. 

The cooperative stores are operated under by-laws or rules, of which printed copies 
are furnished the members. There is no connection between the different stores, each 
cooperative store being independent of all the others and its board of directors having 
nothing to do with anv other store, though the rules governing each store are very 
similar to those governing all the others. The following brief summary of the rules 
adopted by the largest cooperative store in this city will illustrate the general plan 
followed in all the stores: 

The by-laws announce that the society is not a business corporation, and that its aim 
is only to purchase, manufacture, and sell goods for the benefit of its own members, to 
aid its members to be frugal and economical and to assist them to save something out 
of their earnings. 

Each member of the society is to make a deposit of a sum estimated to be sufficient 
to cover his monthly purchases, usually from 20 krone ($5.36) to 50 krone ($13.40). He 
is then given a book and permitted to purchase up to within 2 krone ($0,538) of the 
amount deposited. At the end of each month he must pay cash for all the goods pur¬ 
chased during the month, the original deposit remaining from month to month as the 
society's security for the payment of the goods thus purchased on credit each month. 

Should a member fail to pay his monthly account at the end of the month his original 
deposit is used for payment of his bill, and when he purchases goods to the amount of 
his deposit and fails to pay for them at the end of the month his membership ceases. 
A member may also withdraw from the society at any time and he will then receive the 
money due him at the end of six months. 

At the end of each six months a division of the profits is made among the members 
in the form of a cash rebate on the amount of their purchases during the six months. 
This rebate varies from 6 to 18 per cent of the purchases. Two-thirds of this rebate is 
paid in cash to the member and one-third is retained by the society as a reserve fund 
for the member. When each member’s reserve fund amounts to 20 krone ($5.36) he 
is paid interest on it at the rate of 5 per cent per year; when it amounts to 100 krone 
($26.80) no further additions are made to it and the full percentage of profit on his 
purchases is paid to the member in cash rebates at the end of each six months thereafter. 

If a member exhausts his original deposit in his purchases by failing to pay his 
monthly account and uses a part of his relief fund as security for his monthly account 
he is still allowed interest on the part of his relief fund not so used. In case of sick¬ 
ness only, the society delivers goods to the member not only up to the limit of his 
original deposit, but to the limit of his relief fund, and the manager may also, in his 
discretion, allow the member to have goods to the amount of the rebate due him. 

No goods are sold below the usual prices, all profits being paid to the members semi¬ 
annually in the form of cash rebates. 

The society buys all goods from the wholesale dealers or manufacturers either for 
ca^h or on 30 days’ credit. 

In addition to the 2 kroner ($0,536) retained from each member’s original deposit 
for the reserve fund, each new member must also pay into this fund 2 kroner ($0,536) 
from the first rebate payment made to him. 

The business of each cooperative store is under the supervision of a board of direc¬ 
tors and subcommittee. These two bodies have power to appoint and discharge the 
manager, clerks, and other employees, fix the hours of labor, salaries, and house rent 
arrangements of the manager, and, in connection with the manager, buy goods and 
determine the advisability of establishing branch stores. The board of directors must 
meet every two months and more frequently when necessary. There shall be one 
member of the board for each 100 members of the society, and these are elected at the 
meeting of the members in June. Meetings of the members are held in June and 
December. No one can be elected director or appointed an employee until he has 
been a member a year and purchased goods during that time, except the subordinate 
employees. No director or manager or other employee can be engaged in other mer¬ 
cantile business outside the society, nor can he sell goods to the society. All officers 
and employees must observe secrecy in regard to the society’s business. 

All complaints, proposals, etc., must be presented to the board of directors, and 
appeals may be had to the semiannual meeting of the members. Notice is given in 
thp newspapers of the semiannual meetings of the members. 


112 


COOPERATION AND COST OF LIVING. 


In case of the dissolution of the society, after all just claims are paid the balance of 
the funds on hand at the time of the dissolution shall not be paid over to the members, 
but shall be devoted to some institution, to be selected by the members in their semi¬ 
annual meeting, for the benefit of the laboring people. 

The above synopsis is followed substantially by all the cooperative stores in the 
district, the smaller ones having a somewhat shorter set of by-laws. 

The four cooperative stores of this city during 1911 erected an oleomargarine factory 
for the manufacture of their own oleomargarine. The factory cost $16,080, one half 
of this amount being furnished by the four local cooperative stores and the other half 
being a loan from the banks at 5 per cent interest. 

Provision is made by which other cooperative stores in the district may also pur¬ 
chase an interest in the factory. The factory has a capacity of 2,200,000 pounds of 
oleomargarine per year. It has been in operation four months and reports a profit of 
$2,412, which is to be paid to the four cooperative stores as a cash rebate on tho same 
plan as the cash rebates of the stores are paid to the members, except that 10 p cent 
of the profit is to be set aside as a reserve fund. 

The cooperative societies’ stores are of two kinds, namely, those that sell goods to 
their members only and those that sell to the general public as well. Each society 
store must state the amount of its annual sales, and if it sells to members only it is 
taxed on a reasonable income from one-half of this amount. If it sells to both mem¬ 
bers and nonmembers, it must state separately the amount of its sales to its members 
and to nonmembers, and it is taxed on a reasonable profit on the total amount of its 
sales to nonmembers and on half its sales to members. 

The salary of the manager of the city stores is from $536 to $804 per year in addition 
to free house rent. In the country stores the manager receives from $321 to $428 per 
year in addition to free house rent. 

The country stores in 1911 paid cash rebates to the members amounting to from 6 to 
8 per cent of their purchases. The four stores in this city paid in 1911 cash rebates to 
the members amounting to from 17 to 18 per cent of their purchases. 

The four city stores have employees who make the shoes they sell, and they also 
maintain repair shoeshops. They are contemplating the making of all clothing they 
sell, as well as the manufacture of a number of other classes of goods now purchased at 
wholesale. 

To what extent the establishment of these cooperative stores has affected the cost 
of living in this district is difficult to determine. The cost of living has been steadily 
rising for the past six years, especially, and on most classes of food products is fully 
as high as in cities of similar size in the United States. Servants’ wages, like all other 
wages, are much lower than in the United States. But aside from the cost of hired 
help, tailored clothing, and practically all luxuries, the average cost of living on the 
same scale as in the United States is higher here than there. While the great majority 
of the working classes necessarily live on a wholly different scale here than in the 
Unite^l States, the rapid rise in prices of foodstuffs and household goods in general has 
made The cost of living, even on the scale maintained by the laboring people in this 
district, a most serious problem. It is this that has given rise to the cooperative system. 
But with the growth of the cooperative stores there has* also been a corresponding 
advance in the prices of most commodities making up the family necessaries. This 
has enabled the retail merchants to say that the cooperative stores have accomplished 
nothing in the way of reducing the cost of living. It is entirely clear, however, that 
the cooperative system is as yet too limited and restricted in its operation to have 
had any general effect upon the reduction of prices. It is also clear that so far as the 
members of these cooperative societies are concerned it has materially reduced the 
cost of many family necessaries to them, and has undoubtedly to some"extent in this 
district counteracted the upward tendency of prices, which seems world-wide. 

On the whole it may be said that the cooperative stores in this district are warmly 
supported and ardently defended by the members of the cooperative societies who have 
the utmost faith in them; and that they are almost universally condemned by the 
retail merchants and to a large extent by the other commercial interests of the district 
and are from these sources the object of continuous attacks. The result is much 
bitter feeling; but there has also resulted, it is widely believed, a more economical 
method of buying by the poorer classes, a substantial saving to them on their purchases, 
the laying aside of a small sum for sickness, and the buying all goods for cash each 
month at reasonable prices instead of buying on credit on prices inflated because 
of the credit sales; and it is further believed that the system, as affecting the whole 
community, has acted as a distinct restraint upon the upward tendencv of prices of 
foods and household necessaries. 

P. Emerson Taylor, 

American Consul .* 


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